I created this blog to have a place to share information, ideas, thoughts, and experiences, not necessarily just about real estate, but also life in general.

December 1, 2012

Your Offer Is Accepted - Now, What? Step #6

Reports and Inspections.

Once you and the seller have agreed on the terms of the purchase offer you presented on the property, it becomes a legally binding contract and the escrow process begins.

An escrow account is usually opened by the buyer’s real estate agent. In my area, this is handled through a Title Company which also acts as the escrow holder. As the buyer, you will be expected to send the earnest money deposit to escrow as stated on the contract.

Property inspection and investigation.
Within the period of time outlined in your contract, you will receive property disclosures from the seller. At the same time, you will be expected to exercise due diligence in obtaining the inspections and investigations you deem necessary. Examples are: home and pest inspections; property boundaries for set-backs and easements; covenants, conditions and restrictions; and so on.

There are various inspections available to you as a buyer, but the most important is the home inspection performed by a qualified professional. Some buyers are reluctant to include this expense, especially when they have a friend or family member who “understands real estate or houses”.

Yes, this inspection can be expensive ($375 to $500+), but its well worth it especially for properties sold in “As-Is” condition, short-sales, and REO/foreclosures. You don’t want to buy anything without knowing the problems with the property, which may cost you plenty later on. Focus your attention on structural problems and the major components such as foundation, plumbing, electrical.

“Don’t sweat the small stuff”, in real estate this usually refers to conditions that may be easy or inexpensive to fix. However, if they are important to you, it will be prudent to get an estimate of cost from a qualified trades person to confirm or disregard your concern.

You may be able to convince a the seller to fix the condition, and if all else fails, you can decide to walk away from the transaction. NOTE: Make sure you’re within the inspection period as stated on your contract to approve or disapprove or terminate the agreement to avoid the possibility of liability.

Read and understand the disclosures and reports you receive from the seller, a third party vendor and from the real estate agents involved in your transaction. Ask tons of questions and clarifications before you sign or approve anything. Better to be annoying than be sorry (not too many realtors will like to read this… oh well, I’m sure I’ll hear from them!)

When you are satisfied with the information you obtained about the property, you will be ready to remove the contingencies, except maybe the loan and appraisal conditions which you don’t want to remove until your lender gives you a written final loan commitment.

After you’ve removed ALL contingencies on your purchase agreement, you are in the FINAL STEP: Preparing to close escrow and moving into your amazingly new home! Another good time to do your HAPPY DANCE, just like when a football player scores a touch down!

Watch for my Next Post: Prepare to Close Escrow and Move In. Step #7 

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