Your Home Buying and Selling Questions Answered
Buying or selling a home can be a stressful time, whether it’s your first home or if you’re a seasoned seller. Working with experienced companies you can trust helps to relieve the burden of those stressful decisions. Whether it’s your home inspector, realtor, pest control company, or any number of other professionals involved in the closing process, you need to be able to trust that company to put your new home in their hands. Marissa Chastain of American Pest Control sat down with Chris Dell of exp Realty to discuss some frequently asked questions during the closing process.
Marissa Chastain: Hey Chris, thanks for joining us for this blog post! People often aren’t aware how closely pest control professionals and realtors work together during the closing process so we wanted to get your take on some of the frequently asked questions we hear from our customers. To start us off, what advice would you give to a potential home buyer regarding the home’s termite policy?
Chris Dell: When making an offer to purchase new property, you (or your agent) should ask the seller if he or she has a termite warranty or a copy of a wood infestation report dated within the last year. Ideally, the seller will have a termite warranty, which is essentially a transferable insurance policy against wood-destroying organisms and the damage they can cause. This may not be the case, however. If the seller does have a termite warranty, request a copy of the latest Wood Infestation Inspection Report and contact the pest company before closing to alert them that the policy will be transferring to a new owner.
MC: That’s a great point! Many people aren’t aware that homeowner’s insurance does not cover termite damage. Different Georgia home pest control companies have different policies as far as termite warranty transfers, so the buyer should definitely touch base with the pest control company to find out what their policy is. Our lifetime termite warranties are transferable to the new owner at no cost to the buyer or seller, so it’s a win-win for both to continue the termite warranty. How would you answer this frequently asked question: I’m moving to Georgia from a state with a much different climate. What differences should I be prepared for in regards to home ownership?
CD: Because of the warm, humid climate in Georgia, pests can be a nuisance. Georgia is one of the top states for termites, which means an annual termite inspection is a must for homeowners. Fire ants are a constant problem in my own yard, as they are for many others, and a good preventative treatment before each spring is advisable. Don’t just spray the mounds; treat the yard. If you don’t, new mounds will pop up. (Picture the game wack-a-mole. That’s what it’s like.) Finally, many homes in this part of the state are built on crawl space, and rodents can often find their way into these sheltered areas through vents and drain pipes. A good mesh material guarding the opening to your crawl space should help prevent these kinds of intrusions.
MC: As the saying goes, in the South it’s not if you’ll get termites, it’s when. We have services for all the issues you mentioned including a quarterly fire ant service that keeps yards protected year round as well as a wildlife division that can install and maintain vent screens and other measures to keep wildlife out! In your experience, who is responsible for paying for things like closing costs, a Wood Infestation Inspection Report, and home inspections?
CD: Closing costs by default are the responsibility of the buyer and typically average between 2-4 percent of purchase price. In Georgia, the buyer can ask the seller to contribute up to 3 percent in closing costs. These costs include the appraisal, loan origination fee, title services, taxes, attorney fees, and other miscellaneous items. A Wood Infestation Report and home inspection are not included in closing costs, but these also are by default the responsibility of the buyer and should be performed during the due diligence period.
MC: So, what exactly is a due diligence period?
CD: The due diligence period is a certain numbers of days after a contract offer is accepted (usually 7-14 days), during which the buyer inspects the property and surrounding area to discover any defects or areas of concern that may cause them to think twice about purchasing the property or want to renegotiate with the seller. The buyer can back out of the contract during the due diligence period with no penalty.
MC: What about home inspections; can you shed some light on that process for us?
CD: The home inspection usually costs $400-600 dollars, and the inspector will spend a couple hours combing through the house, top to bottom, looking for any possible defects. For an extra measure of assurance, the buyer should also order (or request the seller to order) a Wood Infestation Inspection Report, which reveals any termite activity and recommends treatment options. The last thing you want after moving into your brand new home is to learn of a termite infestation (or any other major defect) that requires costly remediation. In addition, during the due diligence period, I recommend obtaining a septic letter (if the property isn’t connected to a public sewer), and a well-water test (if the property isn’t connected to public water). Make sure you do your homework before the due diligence period ends, because after it ends you (the buyer) will bear the cost of repairs.
MC: That’s great information to consider. One thing I’d like to add while we’re on the subject of the closing timeline is that Wood Infestation Report inspections must be completed within 30 days of the closing date. For that reason, we encourage customers to schedule within that 30 day time frame. However, if the due diligence period is earlier than that, they might need to acquire 2 wood infestation inspection reports during the closing process. Since these reports are official state documents, the date restrictions aren’t something we can adjust within our company policies.
So after the buyer takes into account all these inspections, what are the actual costs due at closing?
CD: At closing, the buyer will be responsible for the down payment, closing costs, and any money set aside in escrow for the mortgage principal, interest, taxes and homeowners insurance. The seller will receive the amount of the purchase price less their mortgage payoff, closing cost contributions (if any), and real estate commissions.
MC: Good to know. That’s definitely not something any buyer would want to be surprised with once they get to the closing date! Can the buyer ask for a disclosure to make sure they’re aware of any other issues with the home?
CD: The buyer and his or her agent should always ask for a copy of the seller’s disclosure before making an offer on a property. A seller’s disclosure, which is not legally required in Georgia but is often provided by the seller, details everything the seller knows about the condition of the property. For example, the seller is asked about the age and condition of major systems (such as the HVAC), any structural repairs done to the home, whether he or she is aware of any infestations, and many other things. The buyer may ask for clarification on any items in the seller’s disclosure and may also request from the seller any recent receipts, invoices or reports detailing recent inspections or repairs performed. This information should inform whether you decide to make an offer, for how much, and what work you request the seller to complete before closing.
The best way to find out about a home, though, is through a home inspection. I would advise a prospective buyer in every case to hire a reputable home inspector during the due diligence period. A seller is only required to disclose defects they know about, not warrant there are not any defects. A licensed inspector’s job is to find these out. As I wrote above, I also recommend receiving a copy of a Wood Infestation Report, a septic letter (if the property isn’t connected to a public sewer), and a well-water test (if the property isn’t connected to public water).
MC: Sometimes we talk to customers who have just bought a home and are completely new to the area. What are some ways you recommend to your clients to find a service company for their new homes?
CD: Your best bet is to contact the REALTOR who helped you find the home you purchased, or ask for a recommendation of a good REALTOR who can point you in the right direction. REALTORs work with service professionals every day, and they know who can be trusted to get the job done in a professional manner.
MC: Especially here in Athens and surrounding areas, we’re lucky to have a network of business professionals that work closely together through the chamber and plenty of other business organizations. Another tip I usually share is checking online reviews of course and sites like Next Door, where people in your new area can offer personal recommendations. Some companies may even have referral bonuses for new and existing customers so that could be a perk of getting a referral from a neighbor or friend. We offer $20 off to both the existing and new customers for service referrals! We’ve talked a lot about the buyer’s perspective, so let’s talk a little bit about the seller’s responsibilities as well. What are some things sellers can do before listing to make the home appealing to potential buyers?
CD: My recommendation to a seller is to seek to remove every objection a potential buyer may bring up. The best-prepared seller has copies of these reports before putting his or her house on the market: a pre-listing home inspection, wood infestation clearance letter dated within the last year, a septic letter dated within the last four years, and a receipt from any recent servicing done on major systems or appliances, such as the HVAC, water heater, irrigation system, etc. Taking care of these items ahead of listing a home may cost the seller $1,000 or more (depending on what issues are revealed in the pre-listing inspection). But they will save the seller much more than that in the long-run, removing a buyer’s leverage to request major repairs or concessions (or even walk away) when the home is under contract.
MC: Absolutely. Also, since termite warranties are transferable at no cost that’s a great selling point to add that doesn’t cost the homeowner anything if they’re already under bond! If the house is not already under a termite warranty, though, it would be a worthwhile investment to have the home treated for termites before listing so that the buyer has the reassurance of the warranty on the home.
CD: The seller may also elect to convey to the buyer a home warranty at closing, which is essentially an insurance policy covering the home’s systems and appliances during the first year of ownership. These policies cost anywhere between $300-600, depending on the level of coverage selected. Homeowner’s insurance covers the home’s structure. A home warranty covers the systems and appliances inside the house. Along with a septic letter and termite warranty, a homeowner will be well protected against possible calamities.
MC: Chris, thanks so much for joining us today and providing some great insight for our readers!
Chris Dell is a REALTOR with eXp Realty, serving the Athens area. He helps buyers, sellers and investors get the most for their money, and he prides himself on offering top-notch service during the transaction and building relationships with his clients that last a lifetime. Chris works with a growing team of other professionals at eXp and seeks to do business entirely by referral. If you or someone you know needs professional real estate services, give Chris a call! He can be reached at 706-202-9437 or email@example.com. Chris and his wife Erica, a therapist at Banyan Tree Counseling Center, call Athens home with their golden retriever Boomer, affectionately referred to as their “firstborn.”
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