damage due to liens, encumbrances, or defects in the title. Each title insurance policy is subject to specific terms, conditions, and exclusions. Auto and homeowner’s insurance protect against potential future events, and is paid for with monthly or annual premiums. A 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 is hired by the bank and paid for by the buyers. The appraiser evaluates the home based on general condition, geographic location, proximity to objects of interest, value of the 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. The seller might adjust the sale price accordingly, but they are not required to do so. They have the option terminate the contract and release your earnest money back to you and put the home back on the market. If the appraisal comes in low, your agent will work to negotiate a new sales price between the buyer and seller. Ideally, a compromise can be made. 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 initially wanted. This likely is due to the home selling in a buyer’s
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