- Category: For Buyers For Buyers
- Published: 05 November 2006 05 November 2006
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Buying Idaho Real Estate
Idaho is one of the best kept secrets in the nation! Well, that is until a lot of Californians found out about us and moved to the Treasure Valley, Idaho in 2005. 12,000, that is, for a nice round number! I don’t blame them!
Idaho is a fabulous place to raise a family, enjoy the adventures of the great outdoors and to be in a comfortable climate where you can enjoy all 4 seasons without the extreme of any one of them. The Treasure Valley in Idaho offers a diverse economy, maintaining strength in the real estate market and low unemployment rates as well as minimal crime. Who wouldn’t want to live here? The Boise Idaho area offers great value on home purchases and investment opportunities!
Idaho Real Estate values have been on the low of a national average for many years and Idaho continues to offer great buys when it comes to single-family homes and investment properties.
Let’s look at some of the basics when buying Idaho Real Estate:
- Making the Offer
- Earnest Money
- What’s included
- Who Pays For What?
- Taxes and Irrigation
- Title, Escrow and Closing
Making the Offer:
When buying Idaho Real Estate, you will most likely be using the standard RE-21 Purchase and Sale Agreement for. This standard form covers most everything that has come to legal action in times past. No contract is fool proof and it is always recommended that you seek legal advice if you have any specific concerns.
When drafting the offer to purchase or the “Purchase and Sale Agreement”, I typically will counsel my clients to make two standard contingencies; 1) Financing: Unless the purchase is for cash, most often there will be some type of loan required to make the deal. If financing is denied for some reason, this may enable you, as a buyer, to get your earnest money refunded (see below). 2) Inspections: I always recommend buyers conducting a home inspection (also see below) as a contingency of the offer. Further I encourage them to make the offer subject to their complete satisfaction of the findings of any and all inspections. This too, will allow for a refund of earnest money if everything is not satisfactory.
The purchase agreement for Idaho Real Estate is a standard 7 page form. It can look intimidating, but if explained properly, and read thoroughly, most buyers have a great comfort level before their agent presents the offer. It includes details like the final closing or settlement date, who pays for what costs, time frames for financing and inspections, which company will provide title insurance and closing escrow services and a myriad of additional terms that can be written into place when buying Idaho Real Estate.
When making the initial offer on most standard home purchases, there is no set amount of earnest money, however, $1,000 is often recommended. This initial deposit shows the seller that you are “earnest” or serious about making this purchase of Idaho Real Estate and you are putting your money where your mouth is. When the earnest money is too low, some Idaho real estate sellers can take offense to this and think you are not serious. If too high, you may be placing funds at risk that are not necessary. Follow your Idaho Real Estate agent’s advice on this and feel free to speak with your financial advisor or accountant.
The earnest money will be credited to you at closing and applied to the purchase price and/or your closing costs.
Once the contingencies have been met or the time frame for those contingencies, your earnest money could become non-refundable. Make sure you and your agent conduct due diligence and know that “Time is of the Essence” in Idaho Real Estate Contracts.
This area is most likely the most important factor of any purchase agreement. Who will be your ally when searching for the best financing? I recommend a local qualified mortgage lender, preferably a mortgage banker rather than a broker. Don’t get me wrong, a mortgage broker can do a fine job, but just remember that once they broker the loan out (or sub-contract it), they don’t have as much control as a local banker with in-house underwriting. I have seen many transactions fail because of an out of state broker that wasn’t on top of their game and had led the buyer down a long path to disappointment.
I’ll be happy to give you my recommendations for a great lender, just ask me! ...Or I'll just give you this link for the best mortgage lending service around.
The purchase agreement will also include stipulations on what type of loan you are obtaining as a contingency of the offer. This can be for the protection of the buyer as well as disclosure for the seller. My consultation includes all of this subject matter, so don’t hesitate to call me for an appointment. You can also click here for contact information for my loan officer, Leon Baker and apply on-line for a loan!
When buying Idaho Real Estate, it is typical for the oven/range to stay with the property and for the refrigerator to stay with the sellers. This is a rule of thumb, of course and every transaction is different and all things are negotiable. Our standard Idaho Real Estate RE-21 form lists the typical “attached” fixtures that are included with the purchase, such as plumbing fixtures, heating fixtures, attached floor coverings, window coverings, etc. This is the area that is always best to CLARIFY, CLARIFY, CLARIFY!
If it’s not in writing, be cautious! If you want your agent (hopefully that’s me!) to ask for the riding mower in the deal, it better be in writing. If there’s a family heirloom or a special rose bush that was a gift, it should always be specified as to whether it is “included” or “excluded” from the purchase.
Who Pays For What?
Did I say “all things are negotiable?” Well that’s mostly true except for when a government loan is in play. For FHA and VA financing, for instance, it is required that the seller pay for some particular closing costs on behalf of the buyer and for VA, the appraisal fee.
When buying a home in Idaho, the seller typically pays for the appraisal and usually it runs around $400 for a standard purchase. For the closing escrow fee, the standard is around $500 and is typically shared between buyer and seller. Most fees related to buying a home are lender fees or financing fees. These costs are usually paid by the buyer but often times can be included or added to the purchase price and paid for by the seller. This way, instead of you as the buyer coming up with cash to close, these fees can then be financed into your loan and paid monthly within your payment.
Title insurance sounds like a real racket, but is truly a valuable thing to have when buying Idaho Real Estate. The standard Owner’s Policy is usually paid for by the seller and the Lender’s Policy is typically a buyer fee.
When buying a rural property with well, septic or fuel tank, keep in mind that the seller should provide you with a clean water test result, free of bacteria from their well, whether it be private, shared or community well. The seller should also provide you with a septic pumping report from a qualified contractor. When dealing with propane or fuel oil, there is usually some fuel remaining in the tank (whether rented tank or owned). It should be disclosed if the fuel is included in the purchase price or if the seller expects you to pay additional money for the fuel. There could also be an outstanding balance with the local fuel company that you want to make sure is settled before closing.
Yes, Get an Inspection! I recommend contracting a professional inspector, one that is qualified and experienced and carries insurance. Whether the house be 100 years old, brand new construction, or somewhere in between, have it checked out thoroughly! This may be the best $300 or so, spent on your Idaho Real Estate investment.
Most professional inspectors will spend 2-5 hours with a fine tooth comb, going through your new purchase. I have seen brand new homes missing insulation, having disconnected plumbing pipes and even cut floor joists where heat registers have been placed.
For older homes, this is where you may find out about dry rot, mold, heating and cooling deficiencies or simple aesthetic issues that you may not have noticed during your initial walk through. If you have your cousin, dad or brother go through the property, they may miss something that is on a rigid checklist and if they do, they don’t normally have insurance to cover those things.
Keep in mind, the inspection time frame in the purchase and sale agreement may also include the opportunity for you to investigate additional issues in addition to the physical structure of the property. These may include zoning, neighborhood, schools, a newly constructed airport or industrial plant or a myriad of issues that may not be satisfactory to you as a buyer. If worded correctly, this provision in your offer can be a means of returning your earnest money to you should you decide not to purchase the property.
Please be diligent and conduct your inspections and investigations during the strict time frame as outlined in the agreement.
Taxes and Irrigation:
Taxes are one of those things we have to live with and yes, they can have their benefits, of which we often take for granted, but there are a couple of things you want to check out when buying Idaho Real Estate. Idaho offers a “HOE” Home Owner’s Exemption. This is essentially a discount from the standard real property tax when you as the owner, occupy the property as your primary residence. This exemption has to be applied for in person, one time, and can save you as much as 30% or so, on your annual property tax. If the property you are purchasing has had a tenant living n it prior to your purchase, there may be a time lag with which you will have to deal with before benefiting from your applied for exemption. Your first year’s worth of payments may reflect the full tax as opposed to the discounted amount you expected. Check with your agent (me) for details on this issue.
Water is dear to the hearts of Idahoans who live in a high mountain desert. With not more than 20 inches of rain each year, irrigation water is vital to our standard of living and to our green lawns! Each property is usually within a designated irrigation district and receives an annual assessment for the irrigation tax for that parcel. The water may or may not be deliverable, however. Make sure you have water rights or some knowledge that the subdivision has pressurized irrigation before you purchase and later find out that you must use expensive city water to irrigate your lawn.
Title, Escrow and Closing:
Once an offer to purchase is accepted by both parties, the typical time frame until closing (the escrow period) is about 30 days. Some time frames may vary depending on the agreement and each particular situation. During this time frame is when most of the due diligence is completed, like your financing approval and your inspections.
Once it gets close to the settlement date, make sure that you do not go out and buy a new car on credit or make your boss mad and lose your job. Financing underwriters often check credit and verify employment the day of closing a transaction. Be careful and wait until your deed is recorded before you go to your favorite furniture store and buy all new stuff!
The closing process is usually two separate appointments; one for the seller and one for the buyer. Unless arrangements between the cooperating agents have been made, the buyer and seller don’t often meet, unless through a walk-through of the home. After signing papers and making your wrist sore from all that hard work, you may not be done. Often times, the loan does not fund and the deed does not record, until the next day or sometimes after a weekend. Check with your agent for specifics on this. You should never occupy the home prior to it being in your name for liability reasons.
So, that may not be EVERYTHING you need to know about buying Idaho Real Estate, but it’s a great start! Please be sure to contact my office for an appointment to answer all your questions. Thank you for visiting sellidaho.com. While you’re here, please be sure and vote at the poll on the right column and to conduct your own personalized Idaho MLS search. If you like this site, please bookmark it & tell a friend. If you don’t like it….please let me know!