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Escrow, Inspections
& Appraisal

YOUR OFFER AND NEGOTIATIONS: A Step-by-Step Process

The Initial Agreement and Deposit.

An accepted offer t is a legally binding agreement between a potential purchaser and the property’s seller.

Remember that price and terms go hand in hand.  Here are some important tips to keep in mind that can streamline the process of writing an offer:

  • Consider how quickly you are willing and able to close escrow.
  • You will need to specify not only the price you are willing to pay, but the amount of your deposit, down payment, loan and interest rate amounts.
  • Are you in a position to act quickly to satisfy yourself regarding the physical condition and attributes of the property? The sooner you can provide the seller with assurance that you are committed to moving forward with the transaction, the more leverage you may have when it comes to negotiating other terms of the contract.

Adhere to your deadlines.

Now that you have an accepted offer, you and the seller will be given a timeline to mark every stage in the process of closing the real estate transaction. Meeting the requirements on time ensures a smoother flow of negotiations so that each party involved is not in breach of their agreements.  Remember, the Realtor is the hub of the entire transaction, and you should be kept constantly updated throughout the entire process,  so you will always be fully informed and prepared for the next step.

Escrow and Title.

Upon acceptance of your offer,  escrow will be opened the following day, and the escrow officer will issue Escrow Instructions, summarizing the terms of the agreement, including all contingency deadlines. Your deposit will be due in escrow within the specific number of days per the Purchase Contract, and the escrow company will provide you with wiring instructions to give to your bank. The escrow company 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 by the date of closing and that all new encumbrances are properly added to the title. Some properties are subject to restrictions which 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.

 I recommend you consult with 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.

DUE DILIGENCE

Inspections.

 During escrow, you will need to have a licensed property inspector inspect the property within the time frame that was agreed to in the Purchase Contract. If you wish to obtain professional opinions from inspectors who specialize in a specific area (eg. roof, HVAC, structure), you may elect to have different inspectors inspect the property. 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 will not only recommend several different inspectors but we will coordinate this entire effort.

Depending on the outcome of these inspections, one of three things may happen:

  1. You may accept the condition of the property as it is, and remove the physical inspection contingency in its entirety.
  2. You may make requests of the seller to either repair certain items and/or provide you with a Credit in Lieu of Repairs. The seller can either accept your requests, reject them or agree to some modified version thereof.
  3. You may reject the condition of the property, and cancel the transaction so long as that is done withint the specified time frame.

Association Approval.

 If the property that you are purchasing is part of an Association, the escrow officer will request the Conditions, Covenants and Conditions, 12 months of Minutes, Financials, and Budget from the Property Manager for you to review and either approve or disapprove within the allotted due diligence period.

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 minimum amount of coverage will be determined by the lender.  Choosing the right insurance company is critical. How an insurance company performs during a crisis or a loss can have significant implications on your life. Additionally, if you are comparing quotes, make sure you are comparing apples to apples and that the construction replacement costs are in alignment with your local building costs.  We are happy to recommend experienced knowledgeable insurance agents for every property type.

LOAN AND APPRAISAL

It is imperative that you keep in close communication with your Realtor and 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 contingent upon financing, then the property will 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, operating income, etc. Once the underwriter for the lender has approved your loan and the appraisal has come in at the agreed upon purchase price, the lender will proceed to draft loan documents. If there are any conditions to drawing loan documents or funding, the lender will notify you and your Realtor right away.

The escrow officer will contact you to make arrangements for signing your loan documents.  If you prefer, you may ask your Realtor to join you at the signing.

The loan documents will be sent back to the lender who will review them, and if they were signed properly, the lender will wire the funds in to escrow for the entire loan amount and you will wire the remainining amount for your down payment and closing costs.
When escrow has received both wires, the officer will contact both the listing and selling agent to notify them of receipt of the funds. Escrow will record the Grant Deed the folliowing day, which significes the effective close of escrow and transfer of ownership!

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Buying and selling a home is more than just a transaction. It is a process that involves identifying your dreams, goals and objectives, creating a plan and rallying a team of best-in-class advisors to support you along your path from vision to reality.

I look forward to supporting you in this exciting dream-building journey and earning your trust and friendship for years to come.

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