Today we are going to discuss the ever so important home inspection and due diligence process when purchasing a property… And how this is just about one of the only ways to get leverage against the Seller and hopefully get you some closing costs.
Also, on the topic of housing and a market crash, many people are presuming a financial meltdown which could in and of itself create more inventory as people could be in a dire enough of a situation that they need to liquidate.
With that said, don’t hold your Breath in micro-scale issues. Real Estate appreciation is still possible. Nominal values increased in the last 3 out of 5 business cycles.
Keep in mind everybody thinks a bubble is right around the corner. If everybody thinks that and changes their behavior accordingly, it could be like a reverse self-fulfilling prophecy.
Remember, part of the issue of the last housing bubble pop was that everybody thought real estate always goes up. Now we all think it eventually crashed down. Ironically, neither of those statements are wrong.
Into the markets..
Markets have been getting pummeled.. Everybody was catching falling knives, did you go cash? What’s your plays? Out of tech and into banks? Powell has been stapling this afternoon and the bond yields are rocketing. Prices of things are going to rise, and the cost to acquire cash is going to rise – What does that mean to you?
10 YEAR TREASURY BOND YIELD – 1.835%
30 YEAR FIXED NATIONAL FIXED MORTGAGE RATE – 3.66%
So let’s get into the due diligence and home inspection process.
Once you have an accepted purchase agreement (which is the offer) and escrow is opened, you make your earnest money deposit with the Title or Escrow Company. The earnest money deposit is funds that will be used towards your down payment or closing costs at the closing. ;
The EMD may seem like another out-of-pocket cost you have to cover during the home buying process, but it’s extremely important. It protects you, the buyer, if something is wrong with the property. It protects the seller if you simply want out of the deal without valid, legal reasoning, and it proves to the seller that you are serious about your offer.
Right now, in this market, higher earnest money deposits are being put down to make an offer stronger. Now, based on the contract and the laws of your state or jurisdiction, in my State, Nevada, the Earnest Money Deposit can be returned to the Buyer if they decide to get out of the agreement during their due diligence period which we will discuss now.
After your earnest money is received is when you will have your home inspection done. Most due diligence periods are 10 calendar days, but can be shorter or longer depending on the situation and how you want to construct your offer.
Keep in mind, not all home inspectors are the same. You want a home inspector who is thorough, and hyper-active. You want an inspector who is going to find all of the little things, and take their time during the inspection.. Now, if you’re looking to save a hundred dollars or so – which I do not recommend -you can go with a lower-end inspector, but keep in mind, you will get what you pay for.
I recommend Charles Bulfer with Vegas Inspect in my market. In my experience, he has been the best of the dozen or so inspectors my clients have used. He is a true authority, been featured on the local news, and is all-around a great guy. He is also a hyper-active, diligent inspector who truly goes above and beyond for my clients. This is the type of inspector you want.
And the reason why you want all of these little items on the report is because it adds up. It’s extremely difficult to get a “discount” on a home, and many Buyers and investors are waiving appraisals, paying above market value, willing to pay tens of thousands of
