Buying Your First Carlsbad Home – The Pest Inspection

One of the forms that you will need to complete as part of your offer for buying you first Carlsbad home is the “Wood Destroying Pest Inspection and Allocation of Cost Addendum” (called the WPA, for short).

Termites, and other insects that destroy or damage wood, are a big problem in many parts of California. If you are financing your home the mortgage compnay will require that your Carlsbad home have a pest inspection and that the seller obtain a clearance that termites and other critters have been destroyed.

Normally the inspection is completed by the seller (and paid for), and any work needed to take care of what is called Section 1 conditions – evident infestation and/or infection. The buyer generally is expected to take care of Section 2 conditions (those likely to result in infestation or infection). But like many things these are negotiable.

Some homes are sold “as is” and you will be required to do this inspection yourself (and of course pay for it). In some short sales, for example, because of the financial situation of the seller, the owner may only do the inspection and report, but not the repairs, and sometimes not even that. It is part of your due diligence in this case to investigate the possibility of termite issues.

Buying Your First Carlsbad Home – The Offer

The offer part of the purchasing process often cause new buyers the most grief and aggravation. Even more so when they see the actual document used here in Carlsbad (and all of the California) to submit the proposal to the seller.

The purchase document itself is 8 pages, and there are other forms that must be included as well. Knowing in advance what you willl need to consider when making the offer will help you be as prepared as possible.

Read my recent post on the RPA, the Residential Purchase Agreement and JOint Escrow Instruction, for more details on stuff you will need to decide on.

Seller’s Disclosure

The laws regarding disclosure by sellers of defects and overall condition of their homes varies quite a bit. You may or may not see such a disclosure, as is some states it is not required. Check with your agent on this.

A seller’s disclosure, while it does NOT replace having your own home inspection, is a good thing to have. Here is California we have a form call the TDS (Transfer Disclosure Statement) that is required for residential property of 1 – 4 units (there are some exceptions, such as a foreclosure sale). Other states have different forms which sometimes are optional and may be used more commonly in some areas than others.

The seller is required to disclose the overall condition of the property and any known defects (heating, plumbing, AC, electrical, structural, roof, etc.) and is expected to be honest in this disclosure. If the seller does not know of a defect or is unsure, it is fine for that to be disclosed. Some states may require this disclosure be made available for all to review, and in others is need only be provided to a buyer upon an accepted offer (other practices may prevail).

In CA it should be given to a buyer before an offer is extended, but may be given to the buyer after the offer has been made and accepted. If done in the latter case, the buyer has the right to terminate the offer IN WRITING, within 3 days of receiving the TDS.

Armed with the TDS (or other disclosure) the buyer is in a good position to more fully consider the condition of the home along with the home inspection report, and decide if moving ahead with the transaction is a good idea or not.

Pros and Cons of Buying a House

This is NOT about whether you should or should not buy, but how to get through the confusing process of looking at homes and deciding which one is right for you.

Buyers, in general, often have a tough time deciding on the “perfect” house, especially if there is lots to look at. This is even more difficult for new buyers, since they have not been through the process before, and they tend to be a bit more anxious about making a decision.

One of the things I have found helpful is to use a Pro/Con Checklist (See the pic) for each house you see with your agent. This helps you focus on the features and benefits of each property by forcing you to note the things that are Pros, and the things that are Cons, as opposed to simply responding in an overall “Yep, I like it” of “Nope, this is not right” fashion. While it may be very clear with some homes that they are right or wrong, often many are similar. So using this checklist can really help you make the decision and keep from getting confused, or losing your focus on the things you really want and need in a home.

The pic (a scan of the actual doc) is not the greatest. I am having some technical difficulties getting the JPEG loaded on my website, but I am happy to email you a copy that you can print out and copy. Once it is uploaded on my Buyers Page, I will post that, and you will be able to download it yourself. Or simply make your own checklist. You can also order a pad here.

Good luck! If I can answer any questions, please let me know.

How to Become a Good Buyer! (Part 3 of 5)

Here are some more important things to know so that you can be the best buyer possible.

• Make an offer – Now that you found the property you wish to purchase, you will need to make a written offer (a verbal offer is meaningless). This is done on the required state form, and you will also need to include a deposit. The offer will outline terms and conditions as well as your contingencies (commonly, buyers make offers contingent upon the mortgage and home inspection). Your REALTOR will assist you with the required paperwork and will present the offer.
• Offer acceptance OR rejection – Once the offer has been presented to the seller, he or she can respond in one of several ways. The seller may simply accept it (the best situation), or may counter offer with one or more changes (e.g., price, close of escrow date). Any changes negates the initial offer and create a NEW counteroffer which you must consider. If the offer is not acceptable, the seller may reject it outright without a counteroffer; rejection may also be indicated by the seller not responding at all during the time frame you stipulate.
• Contingency Period – after offer acceptance (both parties must sign) there will be many things for you to accomplish, including documents to review and approve (this will vary depending upon state and/or federal requirements). If the offer is contingent on a home inspection you will need to select a inspector. It is important to understand the role of the inspector and your rights as a prospective homeowner.
• Conduct home inspection – The home inspection is YOUR opportunity to learn about the property and the inspector will determine if there are substantive mechanical, structural or other defects. Issues arising out of the home inspection MAY cause you to rethink your decision to purchase the property, or you might decide to request the seller to make certain repiars. An inspection is NOT required however it is a smart thing to do. The purchase contract may not allow you to back out of the deal unless there are documented deficiencies in the inspection.

 Please check back in a few days for Part 4 of this series. Please let me know if there are any questions.

Forms in a Buyer Transaction

Here are some of the forms you can expect to review and sign as part of the typical residential real estate transaction here in California. Not all forms will be applicable in all situations. If you are buying in another state, check with your Realtor to find out what forms are used and familiarize yourself with them. Be sure to ask questions about anything you do not understand.

 

OFFER TO PURCHASE:

• Residential Purchase Agreement and Join Escrow Instructions (RPA-CA)
• Buyer’s Inspection Advisory (BIA)
• Disclosure and Consent for Representation of More than One Buyer or Seller (DA)
• Contingency for Sale or Purchase of Other Property (COP)
• Wood Destroying Pest Inspection and Allocation of Cost Addendum (WPA)
• Disclosure Regarding Real Estate Agency Relationships (AD)
• Addendum to the Purchase Agreement (APA)
• Buyer’s Election of Inspections (BEI)
• Counter Offer No. ___ (CO-11) Use as many as needed

SELLER DISCLOSURES:

• Real Estate Transfer Disclosure Statement (TDS)
• Smoke Detector Statement of Compliance (SDS)
• Seller’s Affidavit of Nonforeign Status (AS)
• Mold Disclosure (MD-11)
• Insurance Claims Disclosure
• Water Heater Statement of Compliance (WHS)
• Seller’s Additional Disclosures (SAD)
• Supplemental Statutory and Contractual Disclosures (SSD)

PROPERTY INSPECTION:

• Agent’s Visual Inspection Checklist (AVI)
• Request for Repair No. ___ (RR)
• Verification of Property Condition (VP-11) Used at final walk-through

CONTINGENCY PERIOD:

• Contingency Removal No. ___ (CR) Use as many as needed

Relocating? Visit Relocation A to Z for some helpful information.