The Process, Step-by-Step
The Initial Agreement and Deposit.
A contract is a legal agreement between a buyer and a seller. The agent will write the contract based on the terms the buyer has requested and present it to the seller’s agent.
Some important tips to keep in mind to streamline the process:
- Verbal agreements are not a contract. We will provide a written document to be signed for all agreements between the buyer and the seller. These will be signed by all parties before they are part of the contract.
- Time is of the essence. Now that you have chosen your property, there will be timelines that need to be met for each party. Meeting the requirements on time ensures a smoother flow of negotiations so that each party involved is not in breach of the contract. During the process we will keep you updated, so you will be prepared for the next step.
The Title Company.
A title company will be selected to close the property for both parties. The title company will generally hold the Earnest Money Deposit. They will research the recorded history of the property to ensure that the title is free and clear of encumbrances and that all new encumbrances are properly added to the title. There may be recorded easements and encroachments, which limit the rights to use your property.
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.
Property Insurance.
If you are obtaining a loan, you will be required by your lender to purchase 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 may 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 to get a lower premium if your home has certain safety features. Long-term customers or customers who choose to bundle multiple policies 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.
Inspections.
Once your offer is accepted by the seller, you can choose to have a property inspector inspect the property within the time frame that was agreed upon in the contract. 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). We can recommend several different inspectors or you can choose your own.
The buyer, after reviewing the inspection reports, chooses which issues they would like addressed by the seller, on a form called the Treatments, Repairs and Replacements (also known as a TRR). The seller will then have the option of accepting the TRR or negotiating the terms of the TRR.
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 may 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, 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.
