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Escrow Inspections and Appraisals

Option Period and Inspections.

In the state of Texas, Buyers have the option of an unconditional right to terminate the contract.  This is referred to as the Option Period.  A nominal fee (typically less than $300) is paid to the Seller for the right of having an Option Period.  The purpose of the Option Period is for the Buyer to have inspections done on the property and to do their due diligence.  The Buyer may exercise his right to terminate the contract during the Option Period. If the contract is terminated during the Option Period, the Earnest Money is released to the Buyer however the Option fee is kept by the Seller and is not refunded.  During the Option Period the Buyer may choose to ask the Seller to make repairs on the property or the Buyer may ask for an allowance in lieu of the Seller making repairs.  The Seller can accept, counter or reject the Buyer’s request.  If the Buyer goes through with the purchase, it is normal and customary that the Option Money is credited back to the Buyer however it is a negotiated item.  The other option is that it is not credited back to the Buyer.

It is imperative that you keep in close communication with your lender, who will let you know when additional documents are needed to approve your loan application and fund your loan. Responding in a timely manner is vital in keeping everything on track and meeting critical financing dates. If the agreement is conditional upon financing, then the property will be appraised by a licensed appraiser to determine the value for the lending institution, via a third party. This is done so that the lending institution can confirm their investment in your property is accurate. Appraisers are specialists in determining the value of properties, based on a combination of square footage measurements, building costs, recent sales of comparable properties, location, amenities and many other factors.

Association Approval.

If the property that you are purchasing is part of a Home Owners Association (HOA), the Title company will request the HOA bylaws, covenants and restrictions in accordance with the contract.  In addition, they will order all documents associated with the transfer including the resale certificate.

Property Insurance.

If you are obtaining a loan, you will be required by your lender to purchase a certain amount of insurance on the property. The value will depend on the lending institution and the purchase price of the property. You may be able to save hundreds of dollars a year on homeowners insurance by shopping around for insurance. You can also save money with these tips.

  • Consider a higher deductible. Increasing your deductible by just a few hundred dollars can make a big difference in your premium.
  • Ask your insurance agent about discounts. You may be able get a lower premium if your home has safety features such as dead-bolt locks, smoke detectors, an alarm system, storm shutters or fire-retardant roofing materials. Persons over 55 years of age or long-term customers may also be offered discounts.
  • Insure your house NOT the land under it. After a disaster, the land is still there. If you do not subtract the value of the land when deciding how much homeowner’s insurance to buy, you could be paying more than you should.