Inspections and Appraisals
Initial Agreement and Deposit:
To streamline the process, it is important to keep written records of all agreements, counter-offers, and addendums and to follow the timeline for each stage of the closing contract. We can assist with drafting written records and provide copies for both parties.
The Closing Agent:
Once both parties have signed the contract and all documents, a closing agent, such as a title company or attorney, will hold and distribute funds associated with the transaction until the closing date. They will also research the property's history to ensure the title is clear of encumbrances and that any new encumbrances are added correctly. All contingencies agreed upon in the Purchase Agreement must be met before the escrow can be closed and the property can be officially purchased.
There are several ways to hold title or ownership of a property, each with different implications for ownership transfer, collateralization, financing, and taxation. We recommend speaking with an attorney or tax advisor to determine the best option for your property. We can connect you with trusted attorneys and tax advisors in the area.
As part of the contingencies outlined in the Purchase Agreement, you will hire a licensed property inspector to assess the property's condition within a specified time frame. You may choose multiple inspectors with expertise in specific areas, such as the roof or plumbing. If you buy a commercial property, you may need to complete an environmental audit or soil test. If the inspections reveal issues with the property that were not specified in the Purchase Agreement, you may request a renegotiation of the terms, typically the price. Once you are satisfied with the inspections and terms of the agreement, the contingencies will be removed.
Appraisals and Lending:
Stay in contact with your lender, and provide any required documents to secure approval for your loan. If the Purchase Agreement is conditional on financing, the lender will require an appraisal by a licensed third-party appraiser to confirm the property's value. Check with your lender two weeks before closing to confirm that the loan will be approved on time.
Some properties may require approval from an association before the purchase can be completed. If this is the case, request all necessary documents and rules from the seller and meet any requirements for approval within the agreed-upon timeframe. Once accepted, your closing agent will request the original copy of the approval letter to be recorded with the deed in the county records during the closing process.
Basic property insurance plans protect against damages to your property, such as fire, theft, and certain weather events. While not required by all states, most mortgage lenders will require insurance coverage. If you plan to live in the property, you will need to purchase homeowners insurance, while landlord insurance is required if you plan to rent out the property as an investment.
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