Question: We live in a big house with a big lot. I’m 66 years old and my husband is 70. We want to move out to the country, where homes are cheaper. We are wondering about discrimination. Will we be hassled because of our age? We want to pay cash for the house. Will we still have to get an appraisal, credit report, title insurance, etc.? What about getting extended title insurance coverage? Will we need a survey? Do we have to hire a building inspector?
J.B., Everett
Answer: You don’t have to do much of anything, other than hand the seller the cash and take title to the home. However, I would strongly advise against buying any property that way.
Mortgage lenders always require an appraisal and title insurance when you apply for a purchase loan because they want to make sure you are getting clear title to the property, and that you are not paying too much for it. That’s to protect the lender, not you. They want to be sure there is sufficient value in the property so that they can recover the loan amount if they are forced to take your home and sell it at a foreclosure auction.
Even though you are paying cash and not going through a lender, you should take the same precautions. Insist that the sellers provide you with an owner’s title insurance policy to guarantee that they actually own the property they are selling, and that you are getting clear title to the property. You don’t want to find out after the fact that there are outstanding loans or liens against the property that would become your responsibility once title is transferred to you.
You may not want to spend $400 to $450 for a full-scale appraisal to determine the fair market value of the property you are buying, but you should do a lot of shopping in the area before you make an offer. Buyers from high-priced areas often over-pay when purchasing homes in lower-priced rural areas because they tend to compare the values to the home prices they are accustomed to back home. Don’t make that mistake. Learn the local real estate market so that you can recognize a fair value based on comparable homes in the local area.
Once you have determined that you are paying a fair price for the property, you should definitely hire a professional building inspector to make sure it is structurally sound. If you are a regular reader of this column, you’ve seen the horror stories from buyers who saved a couple hundred dollars by not hiring a professional home inspector, only to wind up spending thousands of dollars to correct defects in the home that a good inspector would have uncovered prior to closing.
I would also strongly encourage you to have a survey done if you are buying in a rural area where property lines are not clearly delineated. Surveys can costs thousands of dollars if there is a lot of acreage involved, so you might try splitting the cost with the seller. Keep in mind that if you intend to purchase extended coverage title insurance, a survey will probably be required by the title company.
An extended policy costs about 30 percent more than a standard coverage title insurance policy, but it insures you against boundary disputes, which a standard policy does not.
As for your ages, I can’t imagine why you’d even think that would be a problem — especially since you are not taking out a loan. Believe me, any home seller would welcome you with open arms if you made an all-cash offer. Senior citizens sometimes worry that they won’t be able to qualify for a 30-year mortgage because they won’t live that long. But the federal Equal Credit Opportunity Act specifically prohibits discriminating against borrowers on the basis of age. Besides, very few borrowers actually keep a 30-year loan for the full 30 years. Most home loans are paid off early, either through the sale of the property or a refinance of the mortgage.
Mail your real estate questions to Steve Tytler, The Herald, P.O. Box, Everett, WA 98206, or e-mail him at economy@heraldnet.com.
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