Escrow inspections & appraisals

The Process, Step-by-Step

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, we will put everything in writing: initial offers, counter-offers, special requests and agreements, and inspection issues that come up. The offer and any disclosures will be signed by both parties and the offer will have been deemed an “accepted” offer.
• Stick to the schedule. Now that the seller has chosen your offer, 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 I 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 an all of these will be uncovered during the title search.

How to Hold Title.

You may wish to consult an attorney or tax advisor on the best way to hold title. Different methods of holding title have different legal, estate and tax implications, especially when selling or upon death of the title holder.

Inspections.

Once your offer is accepted by the seller, you will need to have a licensed property inspector inspect the property within the time frame that was agreed upon in the effective contract to purchase. You may elect to have different inspectors inspect the property, if you wish to obtain professional opinions from inspectors who specialize in a specific area (eg. roof, HVAC, structure). I work with several inspectors and can make recommendations based on your specific needs. Depending on the outcome of these inspections, one of two things may happen:

1. Either each milestone is successfully closed, and the contingencies will be removed, bringing you one step closer to the closing date, or
2. The buyer, after reviewing the property and the papers, requests a renegotiation of the terms of contract (usually the price).

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, and recent sales of comparable properties.

Association Approval.

If the property that you are purchasing is conditional upon an association’s approval, we will request the rules, regulations, and other important documents from the seller as soon as you have an effective agreement to purchase. Make sure that the application documents and processing fees are submitted to the appropriate person at the association by the required time. Fill out all the information completely and legibly so there is no delay in processing the application. If you are required to meet with the association for your approval, make an appointment as soon as possible for the interview. Most associations require a certificate of approval before moving in. I will request that you bring the original copy of this approval certificate to the closing, so that it can be recorded with the deed in the county public records.

Property Insurance.

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 your specific property type.

Closing Day

If you have come this far, then this means that the closing has been scheduled and you are closer than you have ever been to owning the home of your dreams. The final step prior to closing the transaction is the Final Walk-Through Inspection. More of a formality than anything else, the final inspection takes place a day before, or the day of the closing. We will visit the property to verify that all is in working order, everything is the same as when you last viewed the property, that there are no extra items left behind, and that everything included in your purchase is still at the property.

Closing.

The closing agent will furnish all parties involved with a settlement statement, which summarizes and details the financial transactions carried out 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 mortgage documentation required by the lending institution. If you are unable to attend the scheduled closing, arrangements can be made to pre-sign documents or establish a power of attorney. As a buyer you will be bringing funds to the closing. This is typically the amount of your down payment less your earnest money on deposit, plus any closing costs. You can have the funds wired electronically into the closing agent’s escrow account—typically this occurs the afternoon before or the morning of the closing. It is important to note that if the funds do not arrive at the Title Company by the end of the closing, you will need to wait for the keys to access the home until the funds do arrive at the Title Company—therefore, it is important to plan ahead. The seller will have all property keys and any other important home information for you at the closing and you will receive these items at this time.

Once all the above occurs, congratulations are definitely in order—so, CONGRATULATIONS and ENJOY your NEW HOME!