The Initial Agreement and Deposit.
An agreement is a legal arrangement between a potential purchaser and the property’s seller.
Some important tips to keep in mind:
- Keep a written record of everything, it will be useful to transcribe all verbal agreements including counter-offers and addendums, and convert them into written agreements to be signed by both parties. We will assist you in drafting all paperwork for the purchase and ensure you have copies of everything.
- Now that you have chosen your offer, you and the seller will be given a timeline to mark every stage in the closing process. Meeting the requirements on time ensures a smooth flow of negotiations. During the process we will keep you consistently updated so you will be prepared for the next step.
The Title Company.
When you write an offer you should be prepared to pay an earnest money deposit, typically $1000. This is to demonstrate that your intention is to purchase the property. The Title Company will hold the deposit in escrow and will research the recorded history of the property to ensure the title is free and clear by the date of closing. Some properties are subject to restrictions such as building or parking restrictions and there may be recorded easements and encroachments, which limit the rights to use your property.
Once your offer is accepted by the seller, we highly recommend that you have a professional home inspector conduct a thorough inspection.
Depending on the outcome of these inspections, one of two things may happen:
1. Either each milestone is successfully closed and the contingencies are removed bringing you one step closer to the close, or
2. The buyer, after reviewing the inspection, requests a renegotiation of the terms of contract (usually the price).
Appraisal and Lending.
It is important to keep in close contact with your lender. They 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. This is so the lending institution can confirm their investment in your property is accurate. Appraisers determine the value of properties based on a combination of square footage measurements, building costs, recent sales of comparable properties and operating income. When you are within two weeks of closing, double check with your lender to ensure the loan will go through smoothly.
If the purchase property is conditional upon association approval, request the rules, regulations and other important documents from the seller as soon as you have an effective purchase agreement. Make sure to get the application documents and processing fees submitted to the appropriate person at the association by the required time. Most associations require a certificate of approval before move-in, the Title Company will request you to bring the original copy of the approval letter 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 to purchase home owners insurance on the property. The value of the insurance will depend on the lending institution and the purchase price of the property. You can save money with these tips:
- Consider a higher deductible. Increasing your deductible can make a difference in your premium.
- Ask your agent about discounts. You may be eligible for discounts from certain features your home has such as dead bolts, smoke detectors and security alarms.
- Insure your house NOT the land underneath it. After a disaster, the land is still there. Subtract the value of the land when deciding how much insurance to buy.
We will be happy to recommend knowledgeable insurance agents for every property type.