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 is always better to make all agreements, including counter-offers and addendums, written agreements to be signed by both parties. We will assist you in drafting all the paperwork for your sale and make sure that you have copies of everything.
Stick to the Schedule.
Now that you have chosen your offer, you and the buyer 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 and also ensures 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.
Your realtor will present the offer to the vendor. What can you expect to happen next? There are three possible responses:
Response 1. The seller accepts your offer. The deal is concluded and you move on to the next steps in the buying process.
Response 2. The seller makes a counter-offer. The counter offer might ask for a higher price, or different terms. You can sign the offer back to the seller, offering a higher price than your original offer, but lower than the seller’s counter-offer. If the seller accepts the counter-offer, the deal is concluded.
Response 3. The seller makes a counter-offer, asking for a higher price or different terms. If a counter-offer is returned to you at a higher price, ensure that you know exactly how much you can afford before you start negotiating. You don’t want to get caught up in the heat of the moments with costs you can’t afford. You reject the counter-offer because the price is still too high, or you can’t agree to the conditions. The sale doesn’t go through, and your deposit is returned.
Once your offer is accepted by the seller, you will want 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). If you are purchasing a commercial property, then you will need to have an environmental audit done on the site for the lending institution. We can recommend several different inspectors.
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 may 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.
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 insurance. You can also save money with these tips.
- Consider a higher deductible.Increasing your deductible by just a few hundred dollars can make a big difference in your premium.
- Ask your Insurance agents 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.