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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. One of your agent's most important tasks is to keep careful,
written records of everything. There is always lots of paperwork; the offer, usually
a counter-offer or two and addendums, all of which need signatures by both parties.
You will be provided with copies of all contract forms.

The other crucial task is to stick to a tight schedule. Your agent should provide you
with 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. A good agent will keep
you updated, so you will always be prepared for the next step.

The Title Company

Your earnest money will be held in escrow and the title company 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. Your title company will also make
you aware of any recorded easements and encroachments, which limit the rights
to use your property.

Inspections

Once your offer is accepted by the seller, you will need to have a licensed property
inspector inspect the property within the timeframe that was agreed upon in the
contract. You may elect to have additional inspections, including termite, structural
engineering, etc. Depending on the outcome of these inspections, one of two things
may happen:
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  • Each milestone is successfully closed and the contingencies will be removed, bringing you one step closer to the close.
  • The buyer, after reviewing the property inspection report, requests a renegotiation of terms.

Appraisal and Lending 

If the property is conditional upon financing, then the property will be appraised by
a licensed appraiser to determine the value for the lending institution. Appraisers are
specialists in determining the value of properties, based on a combination of square
footage measurements, building costs, recent sales of comparable properties, etc.
When you are within two weeks of closing, check with your lender to be sure that
the lending process is running smoothly and on time.

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 lender and the
purchase price of the property. You can save money with these tips.
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  • 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 to get lower premiums if your new home has safety features such as smoke detectors, an alarm system or fire-retardant roofing.
  • Insure your house NOT the land under it. How much would the home cost to rebuild? After a fire, 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.

Home Services and Utilities. 

You will want to call to schedule the activation of your utilities a couple of days before
closing. Check with the utility companies to verify that the seller has indeed scheduled
disconnection of service.


FINALLY: CLOSING