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:
- Stick to the schedule. Now that you have 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, we will keep you constantly updated, so you will always be prepared for the next step.
The Closing Agent.
A title company 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 with a prelim by the date of closing and that all new encumbrances are properly added to the title. Some properties are subject to restrictions that limit various activities such as building or parking restrictions. 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 the title. Different methods of holding titles have different legal, estate, and tax implications, especially when selling or upon the death of the titleholder.
Once your offer is accepted by the seller, you will have a licensed inspector inspect the property within you due diligence period agreed upon in your 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 (e.g. roof, HVAC, pool, structure). We can recommend several different inspectors. After reviewing the home inspection report, should there be any items in need of repair, we will negotiate either a request for repairs or credit in lieu of repairs with the Seller.
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 neutral 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, upgrades, recent sales of comparable properties, location, property amenities 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 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. Bundling multiple insurance policies is also a great way to save on your insurance costs!
- 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. We will be happy to recommend experienced knowledgeable insurance agents for every property type.