You will pay a fee for the option period – typically $100 – and this fee is non-refundable. If you decide against purchasing the property, the seller will retain the option fee, but if you purchase the property, the option fee is typically credited to you at closing.

During the option period, you will typically have an inspection performed by a TREC certified inspector and address anything that he/she finds in the inspection. The seller is not required to make any repairs, but you can renegotiate with the seller at this point for any repairs. Always go into the repair negotiation with the mindset of being fair. If you're buying a 25 year old home, don't expect everything to be perfect. The seller will typically agree to bring the home to the condition of the homes that have sold for the same price in the same neighborhood.

After the option period has ended, you are fully committed to the contract. The contract will allow you some other specific “outs” but these “outs” are for very specific reasons. Make sure and have your mind made up on whether or not you want to purchase the home before the option period has ended.

Home Service Contracts

Most buyers ask the seller to pay for a residential service contract for the first year of the home. These policies help reduce the number of disputes between the buyer and seller, after the sale of the home, and they protect both p art ies' interests. These “home warranties” cover certain repairs to appliances and systems during the first year you own the home.

Appraisal of Your Property

Your lender will order an appraisal of the property before closing. It is the appraiser's job to make sure that the home is worth at least the purchase price, because the lender will not loan more money than the home is worth. The appraiser will take measurements of the home, and will look up comparable homes that have recently sold in the area. The appraiser will make a light visual inspection for any necessary repairs, but he/she is not a home inspector.

Property Survey

Most of the time when you borrow money to buy a home, you will have to get a survey and it is always recommended that you obtain one, even if you are paying cash.

The title company will order the survey, which will show the boundaries to the property, and any easements that lie on the property. If there are issues with the survey, you can choose to either accept the encroachment and move forward to closing, or you can terminate the contract. Small encroachments are fairly common, but you should always get the opinion of an attorney if you have any doubts. An encroachment is typically a pool, patio, house addition, or deck, built over the boundary lines on to your property.

Title Insurance

Your title company will run a title search for your property and check the county and state records that relate to your property. Title insurance is very important because it guarantees that you own the property, and that no one else can make a claim to it. If another p art y does try to claim that they own your property, or have filed a lien against it, then the title insurance must pay to defend you in court, or satisfy the claim. Typically, the seller will pay for the title policy, but there are cases when bank owned properties refuse to pay the title policy. If you are borrowing money to purchase the property, your lender will require that a title policy is obtained one way or another.

Mandatory Homeowner's Association

Many properties located in subdivisions require that you become members of the Homeowner's Association. HOA's help keep the neighborhood looking nice, and uniform. If you choose to build any structure outside of your home, add on, or repaint, you will have to run it by the HOA. While many homeowner's consider this a nuisance, bear in mind that the HOA keeps your neighbor from painting his house purple, or from parking his RV in the driveway 9 months out of the year.