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Escrow Inspections and Appraisals

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 the transaction.  To avoid any misunderstandings, it is extremely useful to transcribe all verbal agreements, including counter-offers and addenda, into written agreements to be signed by both parties.  Your Realtor will assist you in drafting all paperwork for your purchase and make sure that you have written and/or electronic copies.
  • Keep on schedule. Now that you have made 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 of this timeline ensures a smoother flow of negotiations so that each party involved adheres to their respective due diligence. During the process your Realtor 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 receive the escrow money deposit and maintain it in an escrow account until closing, plus they will research the title to the property to ensure that the title is free and clear of encumbrances by the date of closing. Some properties are subject to restrictions of which the buyer should be made aware. There may be recorded easements and encroachments, which limit the rights to use your property.

How to Hold Title

You may wish to consult an attorney or tax advisor to determine how you wish to hold the title. Different methods of holding the title have different legal, estate and tax implications, especially when selling or upon the death of the title holder. Title can also have an impact on lending, so if you chose to finance the purchase, disclose your title preference transparently with your lender.


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 contract to purchase. Home inspection, swimming pool inspection, termite (aka, wood destroying organism) inspection are some of the customary inspections.

Depending on the outcome of these inspections, one of two things may happen:

  1. 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 written report(s), may request repairs or a credit in lieu of repair.

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 may 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 homeowners association 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. The attorney or closing agent may have some involvement in this. Fill out information completely and legibly so there is no delay in processing the application. Your Realtor and the closing agent can offer guidance with the requirements as each association may have different protocols. Plus, there is state law affecting rights of rescission concerning your receipt of condominium documents, for example.

Property Insurance

If you are obtaining a loan, you will be required by your lender to purchase homeowners insurance. The value will depend on the lending institution and the purchase price of the property. It is advisable to shop for insurance. Below are suggested tips.

  • Consider a higher deductible. Increasing your deductible by just a few hundred dollars may 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.
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Claudia Watts | Amelia Island, Florida | Real Estate


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