A fair appraisal of the house and lot should be obtained from a disinterested third person. The intelligent man usually wants a better guide than the price asked by the seller, who may either consciously or unconsciously ask too much. The value of the house and lot, or the lot alone, is determined largely by its desirability for a home. The general and specific location, and the public improvements available all have their influence. Their value can best be estimated by an expert.
An appraisal of the property by a building and loan association is generally safe. Sometimes financial institutions will loan approximately 60 per cent of the value of the property. If they will not loan more than 40 per cent of the price asked, it may be assumed that the price is too high. The judgment of dependable real estate dealers is always worth while.
Customs vary in different localities as to the method of arranging a mortgage and completing the purchase of a piece of property. In many places it is common to have a purchase offer or a sales contract signed in advance of the actual transfer of the property. In the purchase offer the buyer agrees to pay the holder a certain sum for the property, provided certain conditions are complied with. When this offer is accepted by the owner it can be used as a basis for arranging loans with which to complete the transaction.
If the intended buyer makes a cash deposit with his offer it is particularly important that he should specify in it whether movable property, such as window shades, gas fixtures, stoves, and other items are included, and should state that risk from fire or elements is assumed by the owner until the title passes. The offer should also be dependent on whether the buyer obtains a satisfactory loan to get the money needed to pay for the property, and on the owner's furnishing papers showing a good marketable title, free from back taxes, liens, encumbrances, or objectionable easements. It is important for a buyer not to bind himself until he is sure exactly what he is to pay for and has made definite financing arrangements. Otherwise he may suffer severe loss. The services of a good lawyer at the time the purchase offer is made may be advisable.
Examination of title: One must be certain that the title to a piece of property is good. The validity of a title may be insured by a guarantee company, or its soundness assured by an abstract company or a competent lawyer. In obtaining a loan a bank will insist on some such evidence that the title is good. Some banks and building and loan associations include a title search in the transaction. The buyer should satisfy himself that the boundaries and corners of the lot are legally as represented to him.
In connection with the title it is well to note whether there are any easements which might, for instance, grant a right of way to a Neighbor, or allow a telephone company to place its poles upon or near the lot, or a water company the right to run its mains across the property.
Sometimes the title to the house is taken out in the name of both husband and wife.