INSPECTIONS & APPRAISALS

The Process

Initial Agreement and Deposit

A purchase agreement is a legal arrangement between a buyer and seller. A few tips to help streamline the process:

• Keep written records of everything, including verbal agreements, counter-offers, and addendums. We can help draft all written records and provide copies for each party.
• Stay on schedule. You and the seller will follow a timeline for each stage of the closing process.

The Closing Agent

Once both parties have agreed to and signed the contract, a title company or attorney will serve as the escrow (closing) agent, and you'll submit your deposit. The escrow agent is a neutral third party who holds, receives, and distributes all funds related to the transaction until closing. They'll also research the property's title history to confirm it's free of encumbrances and ensure any new encumbrances are properly recorded. All contingencies outlined in the purchase agreement must be satisfied before escrow can close and ownership can transfer.

How to Hold Title

There are several ways to hold title, or ownership, of a property, each with different implications for ownership transfer, financing, collateralization, and taxation. We recommend speaking with an attorney or tax advisor to determine which method best fits your situation, and we're happy to connect you with trusted professionals in the area.

As part of the contingencies in the purchase agreement, you'll schedule a licensed property inspector to evaluate the home within an agreed-upon timeframe. Inspectors assess the property's condition and flag any issues. You may want to bring in specialized inspectors for specific areas, such as roofing or plumbing. If you're purchasing a commercial property, an environmental audit or soil test may be required by the lender. If inspections reveal issues not addressed in the purchase agreement, you may request a renegotiation of terms, often the price. Once you're satisfied with the inspection results and terms, the contingencies can be removed.

Appraisals and Lending

Stay in close contact with your lender so you're notified promptly when new documents are needed to finalize your loan. If your purchase is contingent on financing, your lender will require a home appraisal from a licensed third-party appraiser to confirm the property's value based on factors like square footage, building costs, income potential, and more. Check in with your lender about two weeks before closing to confirm your loan is on track for approval.

Association Approval

Some properties may require approval from a homeowners' association before purchase. If applicable, request all relevant rules, regulations, and documents from the seller. Your purchase agreement will include a timeframe for submitting paperwork or scheduling any required meetings. Once approved, your closing agent will request the original approval letter to be recorded with the deed at closing.

Property Insurance

Basic property insurance protects against damage from events like fire, theft, and certain weather conditions. While not all states require coverage, most mortgage lenders do. Depending on your plans for the property, you'll need homeowners insurance if you intend to live there, or landlord insurance if you plan to rent it out as an investment.