The Process, Step-by-Step
The Initial Agreement and Deposit.
The sales contract 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, all agreements including counter-offers and addendums will be in writing, signed by both parties. We will assist you in drafting all the contracts and paperwork for your purchase and will make sure that you have copies of everything.
- Now that you have a ratified 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 meets the stipulated deadlines in the contract. During the process, we will keep you constantly updated, so you will always be prepared for the next step.
The Title Company/Closing Agent.
A title company will be selected as a closing agent. The elected title company will hold your deposit (known as Earnest Money Deposit) in escrow and will research the full recorded history of the property, to ensure that the title is free and clear of encumbrances by the date of closing.
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.
Once your offer is accepted by the seller, you will have a licensed property inspector inspect the property within the time frame that was agreed upon in the contract.
Appraisal and Lending.
It is important 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. Most lenders require the property to be appraised by a licensed appraiser to determine the value. 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 the property that you are purchasing is conditional upon an association approval, 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 of 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 move-in. Your closing agent will request that the original copy of this approval letter be brought to the closing, so that it can be recorded with the deed in the county public records.
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, a security system, storm shutters or fire-retardant roofing materials.
- Insure your house/condo NOT the land under it. 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.