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.
We will assist you in drafting all the paperwork for your purchase and make sure that you have copies of everything. We use an online transaction management system to make it even easier to manage & keep track of important documents.
We will give you an escrow timeline that outlines every stage in the process of closing the real estate contract. Meeting the timelines is a requirement of the contract and we work as the facilitator to keep track of these dates and we make sure all is moving forward according to those details. During the process we will keep you updated so you will always be prepared for the next step.
The Closing Agent.
An escrow and/or title company will be selected as a closing agent and we will have an escrow officer who oversees the escrow. 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 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. Again, we make sure you are informed all along the way.
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 title have different legal, estate and tax implications, especially when selling or upon death of the title holder.
Once your offer is accepted by the seller, you have the right to conduct any and all inspections that you wish at your own expense. (Seller-paid inspections are negotiated with your contract.) We will present you with qualified options of inspectors, depending on what type of inspection you desire, or you are free to select your own inspector as well. Our agents make sure the inspections are completed within the timeframe that was agreed upon in the effective contract to purchase. Some common types of inspections are: Structural Pest, Home, Septic, Well, Roof, HVAC, etc.
Depending on the outcome of these inspections, one of two things may happen:
1. Either each milestone is successfully closed and the contingencies will be removed, bringing you one step closer to the close, or
2. The buyer, after reviewing the property and the papers, requests a renegotiation of the terms of contract (usually the price, but we can also request the seller complete repairs).
During the inspection timeframe, you will also want to review all other factors that can impact the property. This includes (but is not limited to):
1. HOA & CC&Rs – if the property is located within a Homeowner’s Association or is subject to CC&Rs, a copy of that information should be given to you for your thorough review.
2. Easements – The preliminary title report will show if there are any easements allowing for any other parties to access or use the subject property. Common easements are for utility companies, but you should pay special attention to these details.
3. Natural Hazard Disclosure – Includes Property Tax rates, special bonds, etc. – You will receive a report that outlines any and all natural hazards that can affect the subject property. Most common is if the property is in a flood zone, in a severe fire hazard zone, etc. Also on this disclosure is a breakdown of the current property tax bill, which also covers what bonds are included. It’s important to make note of these so there are no surprises down the road. And keep in mind, often you will get a supplemental tax bill once the property is reassessed at the new sales amount.
4. Homeowners 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. Be sure to factor into this quote, any special insurance required based on the Natural Hazard Disclosure, such as flood insurance, etc.
We will be happy to recommend experienced knowledgeable insurance agents for every property type. And please consider the below 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.
- 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.
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 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. The Pinnacle Group also remains in close contact with your lender throughout the escrow timeline, to ensure contractual deadlines are being met and that the necessary paperwork is being completed.
If the property that you are purchasing is conditional upon an association approval, request the rules, regulations, and other important documents from the seller as soon as you have an effective agreement to purchase. Make sure that the application documents and processing fees are submitted to the appropriate person at the association by the required time. Fill out all of the information completely and legibly so there is no delay in processing the application. If you are required to meet with the association for your approval, make an appointment as soon as possible for the interview. Most associations require a certificate of approval before move-in. Your closing agent will request that the original copy of this approval letter be brought to the closing, so that it can be recorded with the deed in the county public records.