When negotiating a contract on a home, everything must be agreed on or you don’t have a fully executed contract. Well, actually almost everything. There is one clause in the contract that if one party initials and the other party does not, you still have a deal. This is the Arbitration Clause. If there is a dispute between buyer and seller, they have agreed, per the contract, to go to mediation. If mediation fails, then there is the option to go to arbitration. If both parties agreed to the arbitration clause in the contract, then you are required to go to arbitration if mediation fails. Arbitration is binding whereas mediation is not binding and is usually an effort to come to a mutually agreed upon compromise. I have heard different things about arbitration. It may or may not be more expensive than going to court. The key is if you don’t sign the arbitration clause, you can always decide to go to arbitration later if there is a dispute. But if you do sign this clause, then arbitration is mandatory in the event that there is a dispute and mediation fails. If you don’t sign, you leave your options open for later.
The upfront insurance premium charged on FHA-insured mortgages for home purchases will increase from 1 percent to 1.75 percent on April 9, and the annual FHA mortgage insurance premiums will rise by one-tenth of a percentage point.
Not only is it a good idea for buyers to check the permit history on a home before they buy, but sellers are wise to check the permit history on their homes before putting them on the market. This way, they can correct any permit issues before the listing goes public.
Some cities require building reports to be pulled on properties before they are sold. There is a cost to pull the report, but it should be under $100. Normally, the seller pays for it, but like everything else, it’s negotiable.
I just had a situation where the building report was delayed. When we finally got it, we were a week away from the close of escrow. The report indicated that there was a permit for use of the frontage of the property. Apparently, the city owned the first 20 feet from the street onto each lot. Each homeowner had to pay a permit for permission to use this footage. This permit was required to be transferred from one owner to the next at the cost of $700. Fortunately, the buyer and seller agreed to split the cost of the permit so they could close escrow.