What Comes with a House You Buy?

Often, the most significant purchase an individual makes during their lifetime is the purchase of real estate. This process can be a confusing and complicated, but it doesn’t need to be such a mystery. Part of simplifying the process is understanding what is included when a home is purchased. When the price is agreed upon, the buyer may still not fully understand what they are indeed getting in that purchase price. Having a clear understanding of precisely what is included when a buyer purchases real estate creates a much less stressful process and maximizes the potential of a satisfying real estate transaction.

The first indication of what is included in the purchase of a particular home is the details in the listing itself. The listing agent, which is the agent that represents the seller, creates the listing which serves as the advertisement for the home. In the listing, the listing agent will include any specific items that are included in the purchase of the home. For instance, if the seller intends to offer all the furniture with the house when they sell it, the listing might say something like “fully furnished.” Or, the seller may opt to offer something that is difficult to move or that they don’t want in their new home. As an example, the seller may include a pool table or a flat screen television. Any of these items that are included in the sale will be detailed in the listing.

It is also important to understand that just because something is not referred to explicitly in the listing, doesn’t necessarily mean it is off limits. Listing agents may not always give all the details in the listing itself but instead are prepared to discuss such information at the time of offer submission. A rule of thumb in real estate in today’s market is that everything is negotiable. In most situations, it doesn’t hurt to ask for what you want, as the worst that can happen is the seller says no, and you may resubmit your offer without the demands you had initially included. Look to your agent for guidance on what is appropriate during this stage of the process.

The key to a successful real estate transaction is communication. Stay in touch with your real estate agent and make sure you ask all questions you may have during the process. If there is something specific that you are hoping will be included when you purchase a home, make sure you let your agent know right away. Everything is negotiable in real estate. Even if it is not mentioned in the listing, if you want to make an offer on a home and you want to buy the pool equipment, for instance, with the home, your agent can specify this when they prepare the offer. The best way to ensure you are fully satisfied with the purchase of a home is to communicate openly with your real estate agent. Your agent is there to help you.

Many buyers assume the only thing that will be included when they purchase their home are the appliances. That is simply not the case in today’s real estate market. Each home is different and each transaction unique. Some sellers may be downsizing and may be open to including artwork or large furniture pieces as they won’t have room for them in their new living arrangements. Buyers have become more creative also and have been known to ask sellers to include things such as boats, cars, and pianos. Anything is fair game in real estate today. Again, this is where communication with the agent is critical. The buyer needs to share their thoughts, opinions, and desires with their agent to ensure the agent is on the same page. The agent can search specifically for homes that include items that a buyer is looking for in the purchase, but the agent can only do that if they know exactly what is important to the buyer.

When a buyer asks their agent what will generally be included when they buy a house, the agent will nearly always give the answer of fixtures. Fixtures include anything that is attached to the home or the land. For instance, most landscaping that is rooted to the ground, lighting both inside and outside, and appliances, just to name a few. As a rule of thumb, when something is mounted on the walls of a house, the item mounted is not included but the mounting itself remains with the home. Many disagreements occur in real estate between buyers and sellers about what is included and what is not, so having a clear understanding of fixtures is exceptionally beneficial. Another classic example is an ornate chandelier or a ceiling fan. Both are considered fixtures and would transfer with the home during the purchase.

If a seller has a interest in a fixture, they can always specify that the item will not transfer with the home. As in the previous example, if a seller has a custom chandelier that they plan to bring with them to their new home, often they will have their agent include a note in the listing or on the contract itself stating that the chandelier is not included in the sale of the home.

In contrast to a fixture, a fitting is something that is not included in the sale of the home, and it is often the seller’s personal property. Legally, fittings are referred to as chattel. A chattel is independent of the home and the land and doesn’t transfer to the new owner. Fittings include everything from furniture to vehicles to the artwork. With the flexibility and creativity now commonplace in real estate transactions, it is not unusual to see offers that specify certain fittings to be included with the sale of the home. Of course, the seller always has the right to decline or provide a counteroffer, but the practice of asking for different fittings is much more popular. For example, in homes that have a pool on the property, it is not unusual for the buyer to request the pool equipment be included in the sale of the home.

Any time there are contracts involved, always get all the details, no matter how trivial they may seem, in writing. When disagreements occur, mediators and judges always look to the contract first. What is in writing is what will be honored. If an agreement is made between buyer and seller, it had better be in writing. If not, the mediator will look to the contract and will enforce it to the letter.

When it comes to a major purchase like that of real estate, even the smallest details can be amplified into an enormous fiasco if not properly documented along the way. When a seller tells the buyer, they can move into the property a few days early, or that they can begin to store their belongings in the garage prior to closing as a matter of convenience, signed documentation is essential. Otherwise, if things go south, the buyer has inadvertently given their personal property to the seller. While the situation can be rectified, the process is arduous and costly, and arguably most importantly, the process is avoidable.

As is commonly known, when an individual purchases a home, there are costs associated with that purchase. In real estate, these costs are known as closing costs. Closing costs vary somewhat depending on several factors including financing, state the property is in, and the title and escrow services used to coordinate the purchase. The closing costs can be divided into five unique categories. These categories include the title and transfer fees, prepaid costs and escrow fees, mortgage insurance, loan-related fees, and third-party fees.

A buyer’s title and transfer fees are self-explanatory. These fees include all costs associated with transferring the title of the property from the seller to the buyer. There are transfer taxes and recording fees in this category as well. Title insurance, while optional in most states, is money well-spent. Title insurance ensures that when the buyer receives the title, there are no outstanding liens against the property. Title insurance is a small price to pay for peace of mind.

Many buyers choose to “escrow” their property taxes and insurance costs. This means that they pay ahead on these expenses and put the money into an escrow account which automatically pays these bills as they come due. This prevents the buyer from having a large tax or insurance bill due once per year and allows the buyer to pay on these expenses monthly, generally as part of their loan payment. Some lenders require a buyer to escrow, but it is optional for many.

A topic of much frustration for many buyers is mortgage insurance. For many lenders, it is a requirement of the loan that the buyer purchase mortgage insurance at the time of the loan origination. Mortgage insurance is an insurance policy that protects the lender if the buyer defaults on their loan. In many cases, if the buyer puts at least 20 percent as a down payment towards the purchase of the home, the lender will waive this requirement. Because mortgage insurance raises the cost of the monthly payment, many buyers find this a frustrating reality of home ownership.

Another cost associated with a buyer’s closing costs is loan-related fees. Lenders charge a myriad of different fees, and each lender varies with which fees are applicable and the amount of these fees. Some lenders charge a fee to obtain a credit report. Then, they may charge an origination fee which is largely the commission paid to the mortgage officer that is responsible for handling the transaction. Once the application is complete, lenders may charge an underwriting fee which covers the cost of the underwriting process. The underwriting process includes all the verifications of information input on the application as well as a review of the applicant’s qualifications for a loan program. It is the underwriter that determines if a loan is approved or if there are any necessary stipulations. Another potential fee associated with the lender are discount points. A discount point is a percentage of the loan that is paid upfront as a part of the closing costs, which essentially allows the buyer to “buy down” the interest rate by a percentage point. For buyers that are cash poor at purchase, this is generally not ideal. However, for those with extra cash available at closing, this may be an excellent option to reduce the monthly payment, and the overall interest paid over the life of the loan.

Lastly, the closing costs include a segment of fees in the third-party category. This category includes any fees due to a third party to complete the home purchase. For instance, if a home inspection is completed during the purchase, they are often paid as a part of the closing costs. Nearly all purchases include an appraisal, and that fee is incorporated here also. Termite inspections, well inspections, septic inspections, or any other type of additional service rendered will also be included in this category.

The purchase of real estate, whether a primary residence, a vacation home, or an investment property is a huge commitment. Clearly understanding the process provides potential buyers with a much higher level of confidence when entering into such transactions. Have a real estate agent to represent you that is experienced, well-qualified, and knowledgeable is also worth its weight in gold. Nothing can diminish the importance of a high level of industry expertise in a real estate transaction. As a buyer, knowing you are represented by a professional can provide the confidence to reduce stress and create a much more enjoyable experience.