Inspections and Appraisals
Most buyers believe it prudent to have the property inspected by a licensed property inspector within the time frame that was agreed upon in the contract to purchase. Some buyers will have several different inspectors inspect the property, if they wish to obtain professional opinions from inspectors who specialize in a specific area (eg. roof, HVAC, structure, termite, swimming pool). If the agreement is conditional upon financing, then the property will be appraised by a licensed appraiser to determine the value on behalf of the lending institution. This is done so that the lending institution can validate the worth of the home relative to contracted price.
Either a title company or an attorney will be selected as the closing agent. Their job is to examine and insure clear title to real estate and handle all the paperwork and/or lending documents associated with such finalizing of the closing. After researching the complete recorded history of your property, they will certify that 1) your title is free and clear of encumbrances (eg. mortgages, leases, or restrictions, liens) by the date of closing; and 2) all new encumbrances are duly included in the title. They account for and deliver all funds that pass through relating to the sale.
A contingency is a condition that must be met before a contract becomes legally binding. The buyer will usually include a contingency stating that their contract is binding only when there is a satisfactory home inspection report from a qualified inspector.
Before completing the purchase of your property, the buyer goes over every aspect of the property, as provided for by purchase agreements and any applicable addenda. These include:
- Obtaining financing and insurance
- Reviewing all pertinent documents, such as preliminary title reports and disclosure documents
- Inspecting the property. The buyer has the right to determine the condition of your property by subjecting it to a wide range of inspections, such as roof, termite/pest, chimney/fireplace, property boundary survey, well, septic, pool/spa, arborist, mold, lead based paint, HVAC, etc.
Depending on the outcome of these inspections, one of two things may happen:
- Either each milestone is successfully closed and the contingencies will be removed, bringing you one step closer to the closing; or
- The buyer, after reviewing the property and the papers, requests a renegotiation of the terms of contract (usually the price).
Should you find yourself in a situation requiring renegotiation, this is when a professional listing Realtor can be pivotal in the outcome of the transaction. Having encountered many property sales in the past, your Realtor will use their expertise to limit liabilities and help see the sale through to closing despite unexpected hurdles.
Loan Approval and Appraisal
A best practice is to work only with buyers who have a lender’s pre-approval, approval letter, or written loan commitment, which is a better guarantee of loan approval than a pre-qualification or no documentation from a lending institute. Expect an appraiser from the lender’s company to review your property and verify that the sales price is appropriate.