ESCROW INSPECTIONS, & APPRAISAL

5.1 Escrow

Escrow is the process that starts when your offer to purchase is accepted by the Seller. Once accepted your agent will then provide the Mortgage Professional and the Title Company a copy of the contract signed by all parties. In addition, part of the agreement included an Earnest Money check from you to be held in an escrow account unreachable by the Buyer or the Seller. This amounts to a good faith gesture and the consideration that binds you to the contract. It signifies you intend to follow through to the close barring one of your contingencies or out-clauses are not triggered for good reason. An example is if the home fails inspection. You would then get your Earnest Money back so long as you abided within the dates agreed within the contract. The earnest money will be held in escrow until the home closes and will be credited to your costs or down payment. The escrow ends when you become the new registered owner of the property.

5.2 Title Company and Escrow Holder

You may need to select a title company and escrow holder, which acts as a neutral third party holding all instruments necessary to the sale, including funds and deed. However, they are usually chosen by the Seller. The title company will research the complete recorded history of the property, to insure 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 covenants and restrictions through homeowners associations, which limit various activities from building to parking restrictions. There may be recorded easements and encroachments, where others have limited rights to use your property.

5.3 How to Hold Title

You may wish to consult with 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. Joint Tenancy, Tenants in Common, or In Severalty are but a few.

5.4 Inspections

Once your offer is accepted by the seller, you'll need to have professional inspectors evaluate your home's major systems. Your agent may recommend other inspections, such as roof, chimney/fireplace, property boundary survey, well, septic, pool/spa, arborist, mold, radon, stucco, structural, and pest. You pay for the inspection at time of inspection. The Inspector works for you and only you since he/she is paid by you. The Inspector should provide you with a full report. Once the inspection is complete you have the option to accept the property in its existing condition, ask the Seller to fix or replace certain items uncovered, or exit the contract based on concerns raised on closer inspection of the home. Click here for a list of recommended inspectors.

5.5 Appraisal and Lending

Following the resolution of the inspection it is important 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. The lender will then send an appraiser out to the property of which you will pay a fee for this service. The fee is usually between $300-$500 depending on the size of home. Appraisers are specialists in determining the value of properties, based on a combination of square footage measurements, building costs, and recent sales of comparable properties. They inform you and the bank that you are not overpaying for the home. After appraisal you should check with your lender to be sure the loan will go through smoothly and on time.