For example, you are going to need an
escrow or settlement company to act as an "independent
third party" between you and the seller. Without having
a third party involved, how do you know that when you
fork over the money, you are going to get the deed? This
is the type of service provided by escrow and
settlement. They will hold your deposit and coordinate
much of the activity that goes on during the escrow
period.
Since this third party is very
important to both you and the seller and both of you
will pay fees to this company, it is important to agree
on which service to use. Therefore, your choice should
be part of the offer. Since you do not buy a home every
other week or so, you are probably unfamiliar with
companies that provide this service. Your agent will
make a recommendation. You have the authority to accept
this recommendation and include it in your offer, or
make your own choice.
Keep in mind that the seller will
also have a preference and this may be a point of
negotiation in a counter-offer. It has become customary
that one side will choose the escrow/settlement agent
and one side chooses the title insurance company. Even
so, everything in real estate is negotiable.
Title Insurance
Title insurance is important because,
by providing you with an Owners Policy, they insure that
you have clear title to the property. If there are any
problems later, you can always go back to the title
insurance company and have them clear it up. Since it is
customary for the seller to pay for the owner’s policy,
they have an interest in which company is used.
However, you are going to pay a fee
to the title insurance company, too. This is for the
Lender’s Policy. The lender’s policy insures your
mortgage lender that there are no liens or judgments
against the property and that the mortgage will be in
first position. In other words, should you sell the
property or refinance it, their mortgage gets paid
first, before any other claims against the property.
The lender’s policy is less expensive
than the owner’s policy.
Termite and Pest Inspection
As part of your offer, you may
require a termite and pest inspection. This company not
only inspects for termite damage and pest infestations,
but also inspects for dry rot and water damage, among
other things. The company that performs the inspection
is important to you as a buyer, because you want to be
sure they do a good job. It is important to the seller
because it is customary that they pay for the inspection
and some types of repairs that may be required.
You should determine which company
you want to perform this inspection and make it a part
of your offer. Otherwise the seller will choose. If you
do not know which company to hire, your agent will make
a recommendation.
