The option period is the buyer's inspection period.
- The option period is usually about 10 days, but may be longer or shorter, depending upon the circumstances.
- During the option period, you may terminate the contract and receive a refund of your earnest money.
- The seller does not have an option period, and is obligated to close under the terms of the contract.
- You must pay a nominal fee ($100 is fairly typical) for the right to have this termination option.
- If you decline the property during the option period for any reason (including major defects in the property), you forfeit the option fee.
- The option provision is contained in TREC contracts. It is not found in most builder contracts.
- During the option period, buyers usually get inspections and address any other concerns they may have.
- It is a good idea to apply for your home insurance during the option period to check the cost.
- When the option time period has passed, you will become fully bound by the terms contract.
You will want to hire a licensed inspector.
- In nearly every case, buyers hire licensed inspectors to inspect the home they are buying.
- Besides the general inspection, you may get a termite, septic, mold, structural and other inspections.
- We will supply a list of inspectors.
- Buyers usually submit to the seller a list of repair requests based on their findings.
- Essentially, this is a re-negotiation and fine tuning of the contract.
- The seller is not obligated to agree to repair requests.
- However, you may terminate the contract if repair issues cannot be resolved, as long as you are still in your option period.
- Here is a list of some typical items that come up on resale inspection reports.
- Review our page on inspecting new construction.
- You may ask the seller to pay for a one year home service policy.
- Sometimes called "home warranties", these policies help to reduce the number of disputes after the sale. They protect the interests of both buyer and seller.
- The policy covers the cost of certain repairs to systems and appliances during your first year of ownership.
- To receive service, you must call the home service company. They send out a local repairman. You will pay the repairman an basic service fee. Additional charges are billed to the warranty company.
- The cost of the basic policy is about $425, but may be more if a pool or other items are added.
- Costs and coverage vary between companies. There is no standard coverage. I can provide the names of several home warranty companies
Loan companies usually require an appraisal.
- An appraisal of the property will usually be ordered by your lender.
- The appraiser represents the interests of the lender. He must verify that the property supports the value in the contract. He will compare it with other recent sales in the area.
- The appraiser is not the same as a house inspector.
- For FHA and VA loans, the appraiser will require that the home meet certain standards set by the FHA and VA.
You should review the property survey.
- The survey shows the land boundaries, improvements, and easements on the property.
- A survey is required when a loan is obtained, and is highly recommended if you are paying cash.
- The survey is usually ordered by the title company.
- If there are any title issues revealed on the survey, you may choose to accept the encroachment and proceed with closing, or terminate the contract.
- Although small encroachments are not uncommon, I will recommend that you get the opinion of an attorney before accepting any title issues.
- Examples of encroachments are: house additions, pools, patios, decks built in utility easements or over building lines.
Title Insurance is usually provided by the seller.
- The title company will research the title property records relating to the property.
- They will issue a "commitment" to provide title insurance. You will receive the commitment with copies of deed restrictions within about 2 weeks after contract.
- If an unexpected title issue comes up, I will recommend that you consult an attorney. You must deliver your objection to the title exception in writing within the time required by the contract.
- Title insurance insures against events that happened in the past which affect the title to the property.
- The title company agrees to defend the insured or pay losses if the title is defective.
- Some examples of hidden defects are: forgeries, lost wills, undisclosed marriages, clerical errors, etc.
- Title insurance rates are set by the State of Texas. Generally, in resale contracts, the seller pays for the owner's policy of title insurance, and you pay for your lender's policy.
- Builders may not include the title policy in the price of their homes. This should be confirmed before a contract is signed.
It's a good idea to read the deed restrictions.
- Deed Restrictions are usually written at the time of platting of the subdivision, and are part of the deeds for all the lots.
- The property you are buying may have no deed restrictions.
- It is important to read the deed restrictions. They may obligate you to certain standards of construction and maintenance.
- Do you want to add on to your property? Do you plan to give classes in your home? As a Realtor, I may not attempt to interpret the deed restrictions or zoning laws to decide if a certain activity will be permitted. If you have a question about what is allowed, start by reading the deed restrictions.
- If you are in the City of Austin, a free resource is the Development Assistance Center at 505 Barton Springs Rd., Suite 100. They are open for walk-ins. A zoning planner will tell you what is allowed by city ordinance, and may have a sense of what the neighborhood groups want.
- In historic areas, neighborhood groups may oppose certain kinds of development.
- Another question we are sometimes asked is: What is going to happen on the vacant tract next to my house? I f the property is under Austin's jurisdiction, the Development Center can tell you who owns it, and what plans have been submitted for approval.
Will you belong to a mandatory Homeowner's Association?
- If the property you are buying is in a subdivision with a mandatory home owner's association, you may require the seller to provide information about the HOA.
- This may include bi-laws, annual dues, cash reserves, insurance, etc.
- You will have 7 days to review this information and, based on this review, you may terminate the contract if you wish.
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