Escrow Inspection and Appraisal
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. Monte Hartman will guide you through the 10 page California Residential Purchase Agreement step by step making sure that you are fully protected with the most favorable terms available. This is a key factor for choosing an expert like Monte Hartman to be your buyer’s representative.
Some important tips to keep in mind to streamline the process:
- Keep written records of everything. For the sake of clarity, it will be extremely useful to transcribe all verbal agreements including counter-offers and addendums and to convert them into written agreements to be signed by both parties. We will assist you in drafting all the paperwork for your purchase and make sure that you have copies of everything.
- Stick to the schedule. Now that you have chosen 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 on time ensures a smoother flow of negotiations so that each party involved is not in breach of their agreements. During the process, the Hartman Cole Team will keep you constantly updated, so you will always be prepared for the next step.
Escrow and Title – The Closing Agent. In California, we use the escrow process and an escrow officer will be selected as a closing agent in conjunction with a title company. The escrow officer will hold the deposit in escrow, prepare escrow instructions and process the requirements of the contract. The title company will research the complete recorded history of the property to ensure that the title is free and clear of encumbrances by the date of closing and that all new encumbrances are properly added to the title. Some properties are subject to restrictions which limit various activities such as building or parking restrictions. There may be recorded easements and encroachments, which limit the rights to use your property. The Monte Hartman Team includes Stephanie Wolf and Meghan Barr of Pickford Escrow as well as Mitch Litrov of California Title. Both companies are well known for their operational excellence.
How to Hold Title. You may wish to consult an attorney or tax advisor on the best way to hold title. Different methods of holding title have different legal, estate and tax implications, especially when selling or upon death of the title holder. Pickford Escrow and California Title may have materials to help guide you so that you can make an informed decision along with the advice from your attorney or accountant.
Inspections. Once your offer is accepted by the seller, you will need to have a good property inspector to inspect the property within the timeframe 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. Sewer, fireplace, mold, roof, HVAC, structure). Typically a general inspection is held first and then specialized inspections may occur based on the initial report. If you are purchasing a commercial property, then you will need to have an environmental audit done on the site for the lending institution. Hartman Cole has years of experience working around a variety of inspectors and we can recommend several different good choices. You Hartman Cole agent wants you to have a good, complete inspection since it protects our liability as well as gives you a good understanding of the general condition of the property. Our many years of experience will certainly benefit you. We have seen bad inspectors in the hundreds of transactions we have closed and we have filtered them out to only provide our best recommendations. We have observed more than a thousand inspections. Hartman Cole will be there to guide you.
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. You, the buyer, after reviewing the property and the report, may
ask Hartman Cole to help you negotiate repairs or dollar credit from the
seller toward the repairs. Cancelation is always your option prior to
this contingency being removed.
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 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. You should regularly check with your lender to be sure the loan will go through smoothly and on time.
Homeowners Association. If the property that you are purchasing is conditional upon your approval of the Homeowner’s Association documents, review of HOA rules, regulations, and other important documents from the association management then it is important that these are provided to you by your escrow officer as soon as possible. Escrow will make sure that the application documents and processing fees are submitted to the appropriate person at the association by the required time. You, the buyer, must read the HOA materials completely so that you are fully aware of the rules and conditions of the HOA.
Property Insurance. If you are obtaining a loan, you may be required by your lender to purchase a certain amount of insurance on the property prior to closing. The value will depend on the lending institution, the type of property 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 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.
Hartman Cole is happy to recommend our experienced, knowledgeable insurance agent, Lisa Leibovich with HomeServices Insurance. Her information is listed on the About Us page.