The steps, process and details of buying real estate can be intimidating and overwhelming to the first-time (and even the veteran) buyer. Lieberman Law Office is known for its competent, professional representation of Buyers, Sellers and Lenders in residential real estate transactions. The team at Lieberman Law has extensive knowledge and expertise in all aspects of the purchase or sale of your property and will help you through every step of the process– whether it is a single family home, condominium, land, multi use building, or multi-family dwelling.
Make an Offer
Once you have found a place and think it could be your future home, it’s time to take a serious step toward purchasing it. This means writing up a purchase offer and signing a real estate contract.
By signing you’re committing to moving forward on the purchase with the seller. There are contingencies to many real estate contracts, however most contracts will be contingent on inspections, disclosure review, loan approval, appraisal or other matters. These “contingencies” are ways to exit the contract should something not go as anticipated.
A home is a huge purchase — likely the biggest of your lifetime. And so, as part of the real estate contract, you have the right to a property inspection.
The most common is a “general” property inspection. The inspector will check the home from the foundation to the roof and investigate all major systems and components. You, as the buyer, should follow alongside the inspector to learn more about the property. You’ll want to know about the components (such as the water heater) and have a plan in place for maintenance.
As a result of the general property inspection, the inspector may suggest having a specialist come out. This could be a roofer, electrician, HVAC specialist or even an engineer. Listen to the inspector and have any follow-up inspections as necessary. This is your one chance to approve the property from top to bottom. If issues arise, you might go back to the seller and negotiate some sort of fix or credit. If something major arises and it’s just not what you signed up for, you can exit the contract via your inspection contingency.
Most buyers will put a certain amount of money down toward the purchase price. The balance will come as a loan from the bank. But the bank isn’t going to hand over that money without doing its due diligence. The appraisal is the financial institution’s way of making sure the contract price is the right price. The bank sends out a third-party appraiser, which the buyer pays for, to confirm that the contract price is in line with the neighborhood’s comparable sales. If it’s not, the bank can deny the loan or change the terms.
Loan Approval or Committment
In addition to making certain the property appraises at no less than the contract price, the bank will want to fully approve your credit, debt and income history. It’ll also want to approve the property’s preliminary title report to make sure there aren’t any liens recorded against the property that might affect its value. The bank can take up to a month to do its full review, which should result in a loan commitment or full loan approval. Once that’s completed to the bank’s satisfaction, you’re guaranteed a loan, and you’re one step closer to closing.
A day or so before closing, you’ll want to walk back through the property to make sure it’s in the condition it was when you last saw it. You want to be certain that the seller didn’t remove any fixtures, make modifications or leave behind garbage or debris. You also want to make sure any fixes you negotiated with the seller were indeed completed.
Depending on the market, the closing may happen at an attorney’s office or with an escrow officer at a title company. In some jurisdictions, the buyer and seller don’t ever meet. Each goes in to sign their closing papers separately, and the property closes in the background. In others, the buyers and sellers sign the closing documents together.
Regardless of how a closing happens, if you’re a buyer and getting a loan, plan on signing dozens of documents at closing. You’ll have to show up to the closing with a photo ID, as your signature will be notarized. Prior to the closing, your real estate agent, attorney or escrow officer should send over a closing statement to review. This will spell out your final closing numbers and what money you need to bring to closing. The funds can be wired in or paid with a cashier’s check on closing day. Be sure to ask for the statement early, so there aren’t any last-minute surprises.
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