title insurance policy insures against past events for a one-time premium paid at the close of the escrow. Title defects include another person claiming an ownership interest, improperly recorded documents, fraud, forgery, liens, encroachments, easements, and other items specified in the insurance policy.
#7. Conduct a Home Appraisal
A home appraisal determines the estimated market value of your soon-to-be property. The appraiser evaluates it based on general condition, geographic location, proximity to objects of interest, the value of nearby houses, recent sales, and neighborhood growth and potential, among other factors. Mortgage lenders use this information to make sure the amount you borrow is supported by the home’s value. There’s always a risk of a low appraisal. In that case, the lender won’t go through with the transaction at that price and the transaction may need to be renegotiated. The seller might adjust the sale price accordingly but also might not. The appraisal value isn’t a binding figure — what the seller sells for and the buyer pays determines the sale price. The situation might be that you negotiated a deal with the seller for a price already lower than they initially wanted. This likely is due to the home selling in a buyer’s market and or its location being in a declining market area. This may slow or disrupt the closing process while further negotiations are conducted. Another issue happening in a hyper seller market is home prices getting bid up higher than market values. We do sometimes see the homes not appraising out for these "bid-up" prices and thus the appraised value ends up being lower than the negotiated sales price. We have seen many sellers having to lower their price in these cases as well which means the buyer ends up getting a better deal or buyers having to cover the "Gap" if the home appraises
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