Time to Buy
Once you have identified the property you want to purchase, your real estate agent can help you make an offer. A good agent will investigate the potential costs and expenses associated with the new property. An agent can also help you draft your offer in a way that gives you the advantage over another offer.
The Initial Agreement and Deposit
An effective agreement is a legal arrangement between a potential purchaser and the property's seller.
Some important tips to keep in mind to streamline the process:
- Keep written records of everything. For the sake of clarity, it will be extremely useful to transcribe all verbal agreements including counter-offers and addendums and to convert them into written agreements to be signed by both parties. We will assist you in drafting all the paperwork for your purchase and make sure that you have copies of everything.
- Stick to the schedule. Now that you have an agreed upon contract, you and the seller will be given a timeline to mark every stage in the process of closing the real estate contract. Meeting the requirements on time ensures a smoother flow of negotiations so that each party involved is not in breach of their agreements. During the process we will keep you constantly updated, so you will always be prepared for the next step.
The Closing Agent
Either a title company or an attorney will be selected as a closing agent. The closing agent will hold the deposit in escrow and will research the complete recorded history of the property to ensure that the title is free and clear of encumbrances by the date of closing and that all new encumbrances are properly added to the title. Some properties are subject to restrictions which limit various activities such as building or parking restrictions. There may be recorded easements and encroachments, which limit the rights to use your property.
Once your offer is agreed upon by both parties, and you have built in a property contingency, you will have the option to do any inspections you’d like within the timeframe that was agreed upon in the effective contract to purchase. You may elect to have different inspectors evaluate the property, if you wish to obtain professional opinions from inspectors who specialize in a specific area (eg. roof, HVAC, structure). If you are purchasing a commercial property, then you will need to have an environmental audit done on the site for the lending institution. We can recommend several different inspectors.
Depending on the outcome of these inspections, one of two things may happen:
- Either each milestone is successfully closed and the contingencies will be removed, bringing you one step closer to the close of escrow, or
- The buyer, after reviewing the property and the papers, requests a renegotiation of the terms of contract.
Appraisal and Lending
It is imperative that you keep in close communication with your lender, who will let you know when additional documents are needed to approve your loan application and fund your loan. If the agreement is conditional upon financing, then the property will be appraised by a licensed appraiser to determine the value for the lending institution, via a third party. This is done so that the lending institution can confirm their investment in your property is accurate. Appraisers are specialists in determining the value of properties, based on a combination of square footage measurements, building costs, recent sales of comparable properties, operating income, etc. When you are within two weeks of closing, double check with your lender to be sure the loan will go through smoothly and on time.
If you are obtaining a loan, you will be required by your lender to purchase a certain amount of insurance on the property. The value will depend on the lending institution and the purchase price of the property. You may be able to save hundreds of dollars a year on homeowners insurance by shopping around for insurance. You can also save money with these tips.
- Consider a higher deductible. Increasing your deductible by just a few hundred dollars can make a big difference in your premium.
- Ask your insurance agent about discounts. You may be able get a lower premium if your home has safety features such as dead-bolt locks, smoke detectors, an alarm system, storm shutters or fire-retardant roofing materials. Persons over 55 years of age or long-term customers may also be offered discounts.
- Insure your house NOT the land under it. After a disaster, the land is still there. If you do not subtract the value of the land when deciding how much homeowner’s insurance to buy, you will pay more than you should.
I will be happy to recommend experienced knowledgeable insurance agents for every property type.
Final Walk-Through Inspection
More of a formality than anything else, the final inspection takes place a couple of days before, or the day of the closing, depending on when the sellers/occupants vacate the property. You will visit the property to verify that all is in working order, everything is the same as the day you purchased the home including requested repairs by Seller, that there are no extra items left behind, and that everything included in your purchase is still at the property.
This typically takes place 3-5 business days prior to the close of escrow.
When the lender is ready to ”close” your loan, or “fund” it, your real estate agent and your mortgage broker will have you sign the final loan and title documents. Signing will typically take place in front of a notary or an escrow officer. Ask your mortgage broker if there is anything you need to do to prepare for this, such as bringing a photo ID or perhaps a cashiers’ check if you are purchasing real estate. Allow yourself enough time to review the documents for accuracy.
If funds are being wired: “Wiring instructions” direct the electronic transfer of money between financial companies. If possible, arrange to have the wiring instructions in place ahead of time and checked for accuracy by both the sender and recipient of the wire. It is critical that these instructions be exact, and even so, delays are all too common.
How to Hold Title
You may wish to consult an attorney or tax advisor on the best way to hold title given your situation. Different methods of holding title have different legal, estate and tax implications, especially when selling or upon death of the title holder.
Home Services and Utilities
I will provide a list of useful numbers for the activation of home services and utilities after the closing occurs. Feel free to use my online tool as well (found under Other Resources).
I am ready to assist you should an unforeseen glitch pop up, even at this last stage. Expect the unexpected. Something at the property breaks down, or some other minor detail - no need to worry. I have encountered these problems before so I know how to handle them efficiently and in a stress-free manor.
If you have come this far, then this means that it is almost time for a "congratulations," but not yet.
The closing agent/escrow officer will furnish all parties involved with a settlement statement, which summarizes and details the financial transactions enacted in the process. You and the seller(s) will sign this statement, as well as the closing agent, certifying its accuracy. If you are obtaining financing, you will have to sign all pertinent documentation required by the lending institution. If you are unable to attend the scheduled closing, arrangements can be made depending on the circumstances and the notice that we receive. If you are bringing funds to the transaction, you can elect to either have the funds wired electronically into the closing agent’s escrow account, or bring a certified bank check to the closing in the amount specified on the settlement statement. The seller should arrange to have all property keys and any other important information for you at the closing so that you may receive these items at this time.