Life @ Home eNewsletter: March 2021 for Buyers

» 5 common contingencies when buying a home
» All about comps: How to find and use comparable listings
» The buzz on spring house pests

It’s vital to understand the terms “earnest money” and “contingencies” when house hunting. Earnest money is paid up-front as a show of good faith when you make an offer on a home. It is held by an escrow company until the sale is finalized or falls through. A contingency is a condition added to a purchase offer. If that condition isn’t met, the buyer keeps their earnest money if they walk away.

Here are the five most common contingencies used by homebuyers.

• Appraisal: This contingency means the offer depends on a satisfactory appraisal of the property. If the appraiser decides the value of the home is much lower than the sale price, the buyer can re-negotiate or walk away.
• Financing: This contingency gives the buyer time to secure a home loan. It protects them in the event they cannot find a lender or do not qualify for the amount they need.
• Home sale: If a buyer needs to sell their current home, this contingency gives them time to do so. If they cannot sell their home, they get their earnest money back. This contingency is no longer very common, as sellers generally decline offers with it.
• Inspection: If the home inspection reveals any problems, this contingency gives the buyer a chance to negotiate repairs with the seller. If an agreement cannot be reached, the buyer can walk away.
• Title: This contingency protects the buyer if any problems arise during the title search. Common problems include contested ownership or another person’s debts needing to be paid.

To assess your home’s value, you must understand comps. Comps refers to comparable listings, which are similar properties that have sold recently. While a Realtor can help you find comps, you can also do it yourself. All it requires is a critical eye and a little virtual legwork.

Start your search by looking through nearby recently sold listings on real estate sites. Do not include for-sale listings, as their final price hasn’t been determined.

Narrow your search by location. First, comps should be in the same neighborhood. Second, they should be similarly situated in that neighborhood. Consider divisions like railroads as well as proximity to perks, like waterfront access. Comps should be on the same side of dividing features, and a similar distance from perks.

Filter by details including date sold, price, square footage, and number of bedrooms and bathrooms. You’re looking for listings that match as close as possible. Once you’ve identified some candidates, take a look at the listing photos, if available. Construction quality, appliances and renovations are some of the similarities to focus on.

Take the three closest comps you found during your search. The median price will give you a solid idea of your home’s market value, plus or minus its unique features.

• Boxelder bugs: flat, black bugs with orange markings.
• Carpenter ants: very large red or black ants.
• Cluster flies: large flies with gold backs.
• Stink bugs: spade-shaped bugs that emit a foul odor.