Escrow Inspections & Appraisals
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.
Some important tips to keep in mind to streamline the process:
- Keep written records of everything. For the sake of clarity, it will be extremely useful to transcribe all verbal agreements including counter-offers and addendums and to convert them into written agreements to be signed by both parties. We will assist you in drafting all the paperwork for your purchase and make sure that you have copies of everything.
- 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 closing agent, chosen either from a title company or an attorney, will be designated. This agent will hold the deposit in escrow and conduct thorough research into the property’s recorded history to confirm a clear title free of encumbrances by the closing date. Any newly incurred encumbrances will be duly noted and incorporated into the title. Certain properties may be subject to restrictions, such as building or parking limitations, while recorded easements and encroachments might also restrict property usage rights.
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 titles have different legal, estate, and tax implications, especially when selling or upon the death of the titleholder.
Inspections.
Once your offer is accepted by the seller, you will need to have a licensed property inspector inspect the property within the time frame that was agreed upon in the effective 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 (eg. roof, HVAC, structure). If you are purchasing a commercial property, then you will need to have an environmental audit done on the site for the lending institution. We can recommend several different inspectors.
Depending on the outcome of these inspections, one of two things may happen:
- Either each milestone is successfully closed, and the contingencies will be removed, bringing you one step closer to the close, or
- The buyer, after reviewing the property and the papers, requests a renegotiation of the terms of the contract (usually the price).
Appraisal and Lending.
It’s crucial to maintain open communication with your lender, who will notify you of any additional documents required to approve your loan application and facilitate funding. If the agreement is contingent upon financing, a licensed appraiser will evaluate the property to determine its value for the lending institution, conducted independently. This appraisal ensures the accuracy of the institution’s investment in your property. Appraisers specialize in assessing property values, considering factors such as square footage, construction costs, recent comparable property sales, and operating income. As the closing date approaches, it’s advisable to confirm with your lender within two weeks to ensure a smooth and timely loan approval process.
Association Approval.
If your purchase of the property is contingent upon approval from an association, promptly request the rules, regulations, and essential documents from the seller once an effective purchase agreement is established. Ensure timely submission of application documents and processing fees to the designated association representative. Complete all required information thoroughly and legibly to avoid any processing delays. If a meeting with the association is necessary for approval, schedule the appointment at your earliest convenience. Most associations mandate a certificate of approval before moving in. Your closing agent will request the original approval letter to be presented at closing for recording with the deed in the county public records.
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 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 to get a lower premium if your home has safety features such as deadbolt 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.
- 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.