Escrow Inspections and Appraisals

Escrow Inspections and Appraisals: A Step-by-Step Guide Through the Process

The Initial Agreement and Deposit

You have most likely been through this before, so please consider this a refresher course. If you’re buying for the first time, you will find the following to be very helpful. Either way, Sandi Phillips & Associates is here to help you through every step.

Some important tips to keep in mind to streamline the process

• Keep written records of everything. For the sake of clarity, it is 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 draft all of the paperwork for your purchase and make sure that you have copies. Most of the process is done digitally now, which saves a tremendous amount of your time.
• Timeliness is Key. 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 contract. Meeting the requirements on time ensures a smoother flow of negotiations so that each party involved is not in breach of their agreements. We will keep you updated so you will always be prepared for the next step.

The Closing Agent

Either a title company or an attorney will be selected as a closing agent. 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 that limit various activities, such as building or parking restrictions. There may be recorded easements and encroachments that limit the rights to use your property.

How to Hold Title

You may wish to consult an attorney or tax advisor for 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. Remember, we’re here to help you.

Inspections

Once your offer is accepted by the seller, you will need to have a licensed property inspector inspect the property within the time frame that was agreed upon in the effective contract to purchase. You may elect to have different inspectors inspect the property if you wish to obtain professional opinions from inspectors who specialize in a specific area (eg. roof, HVAC, structure).

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 that their investment in your property is accurate. Appraisers are specialists in determining the value of properties, based on a combination of square footage, 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. Again, there’s no need to stress. We are with you every step of the way.

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 value will depend on the lending institution and the purchase price of the property. You may be able to save hundreds of dollars a year on homeowners’ insurance by shopping around for the right policy. To save even more money:

• 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 receive a lower premium if your home has safety features such as an alarm system 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 have built strong relationships with experienced and knowledgeable insurance agents for every property type and are happy to offer recommendations.