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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.
The process of closing on a property involves a number of important steps, one of which is selecting a closing agent. Depending on the region in which you're buying property, either a title company or an attorney may be chosen to serve as your closing agent.
The role of the closing agent is to ensure that the transfer of ownership of the property goes smoothly and that all relevant legal requirements are met. The closing agent will typically hold the deposit in escrow until the closing date and will perform a thorough review of the property's recorded history to ensure that the title is free and clear of any encumbrances that could impact the sale.
During this review process, the closing agent will search public records to identify any potential issues with the title, such as liens or other encumbrances that may impact your ability to assume clear ownership of the property. If any such issues are identified, the closing agent will work to resolve them prior to the closing date to ensure that you have a clear title to the property.
Additionally, the closing agent will review any restrictions that may be associated with the property. This may include building or parking restrictions, recorded easements or encroachments, and other limitations on the use of the property. By thoroughly researching and reviewing these issues, the closing agent can help ensure that you have a full understanding of the property's legal status and can proceed with the transaction with confidence.
Overall, the role of the closing agent is critical in ensuring a successful and smooth transfer of ownership of the property. By working with a skilled and experienced closing agent, you can feel confident that your interests are protected and that your new property is a sound investment for your needs.
How to Hold Title.
When purchasing a property, there are many important decisions to make, including how to hold title to the property. The method of holding title can have significant legal, estate, and tax implications, particularly in the event of a sale or the death of the title holder.
Given the complexity of these issues, it's often advisable to consult with an attorney or tax advisor to determine the best way to hold title to your property. An attorney or tax advisor can provide valuable insights into the legal and financial implications of different methods of holding title, and help you choose the one that is best suited for your individual circumstances.
For example, holding title as joint tenants with rights of survivorship can be a smart choice for couples who want the property to transfer automatically to the surviving spouse in the event of death. However, this method of holding title may not be the best choice for individuals who have complex estate planning needs or who want to leave their property to multiple heirs.
Similarly, holding title as tenants in common can be a useful option for co-owners who want to maintain separate ownership interests in the property. However, this method of holding title can be more complex to navigate in the event of a sale or transfer of ownership.
Ultimately, the decision of how to hold title to your property should be based on your individual circumstances, goals, and priorities. By consulting with an attorney or tax advisor, you can make a well-informed decision that takes into account all relevant legal and financial considerations.
Inspections.
After your offer has been accepted by the seller, it's important to have a licensed property inspector inspect the property within the agreed-upon time frame as stipulated in the effective contract to purchase. This step is essential in ensuring that you are aware of any potential issues or problems with the property before you finalize the purchase.
Depending on your needs and preferences, you may elect to have different inspectors inspect the property to obtain professional opinions from experts who specialize in a specific area. For instance, you may choose to have a roofing inspector evaluate the roof, an HVAC specialist assess the heating and cooling systems, or a structural engineer evaluate the overall stability and safety of the building.
If you are purchasing a commercial property, it's likely that your lending institution will require an environmental audit to be conducted on the site. This audit will assess any potential environmental hazards or risks associated with the property, such as contaminated soil or groundwater, hazardous waste materials, or other environmental concerns.
As you navigate this process, our team can provide valuable guidance and support. We have established relationships with a network of reputable and experienced property inspectors who can provide comprehensive evaluations and reports to help you make informed decisions about your purchase.
Ultimately, by conducting a thorough inspection of the property before finalizing the purchase, you can ensure that you are aware of any potential issues and can take appropriate steps to address them. With the guidance and support of our team, you can feel confident that you are making a sound investment in a property that meets your needs and aligns with your long-term goals.
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).
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. When you are within two weeks of closing, double check with your lender to be sure the loan will go through smoothly and on time.
Association Approval.
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.
Property Insurance.
When obtaining a loan to purchase a property, it's important to keep in mind that you will be required by your lender to purchase a certain amount of insurance on the property. The specific value of the insurance required will depend on the lending institution as well as the purchase price of the property.
It's worth noting that while insurance may be a requirement of your lender, it can also be a valuable investment in protecting your investment. Homeowners insurance can provide coverage for damage caused by natural disasters, theft, vandalism, and other unforeseen events, helping to safeguard your financial interests in the property.
That said, it's also important to shop around for insurance to ensure that you're getting the best possible coverage at a fair price. You may be able to save hundreds of dollars a year by comparing policies and rates from multiple insurance providers.
In addition to shopping around, there are several other steps you can take to reduce your homeowners insurance costs. For example, you may be able to qualify for discounts by installing a home security system, adding smoke detectors, or improving your credit score.
Another strategy for reducing insurance costs is to raise your deductible. While this will increase your out-of-pocket expenses in the event of a claim, it can significantly lower your annual insurance premiums, saving you money over the long run.
Ultimately, by taking a proactive approach to insurance and seeking out cost-saving opportunities, you can ensure that you're getting the best possible coverage at a fair price. With the right insurance in place, you can feel confident that your investment in the property is protected and secure for years to come.
- 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.
We will be happy to recommend experienced knowledgeable insurance agents for every property type.