Business & Merchant

Last Updated on Saturday, 28 May 2016 01:24

By Roger Dolanch - Broker/Owner

Once buyers locate their dream home, they make a formal written commitment to the purchase by entering into a Standard Agreement of Sale for Real Estate with the seller. The steps below are typical of those you'll follow from your initial contract to your closing:

1. LOAN APPLICATION: Buyers must complete a formal loan application immediately because processing takes quite some time. The seller will be notified that the loan application is completed so they may anticipate with confidence that things are proceeding as planned. Everything must be accounted for and have a proper “paper trail” or they buyer may be denied the mortgage.

2. BUYERS DUE DILIGENCE/INSEPCTIONS: During this contractual time period, typically 10 to 15 days, the seller grants the buyer the option of terminating the agreement for any unsatisfactory result from the issues agreed to in the Agreement of Sale. The results of this process can amount to a complete renegotiation of the contract.

3. HOME INSPECTION AND ENVIORNMENTAL HAZARDS, RADON, PRIVATE WATER AND ON-LOT SEWAGE DISPOSAL SYSTEMS, LEAD-BASED PAINT: These inspections must be performed by certified inspectors or professionals who are chosen and then paid by the buyers at the time of the inspection.

4. WOOD INFESTATION: A licensed pest control operator must certify that the property is free from infestation by termites or other wood destroying organisms. If infestation is discovered, treatment and repair will be required.

5. PROPERTY AND FLOOD INSURANCE: The coverage must be adequate to satisfy the requirements of the lender, but it’s even better is to have sufficient insurance to cover replacement cost in the unlikely event of a total loss. If the combined insurance premiums turn out to be higher than anticipated when the buyer was pre-approved, it changes the buyers’ qualifying ratios for their monthly mortgage payments. It can be cause enough for the lender to deny the loan.

6. DEED RESTRICITONS AND ZONING, PROPERTY BOUNDARIES: These issues may have an impact on the buyers intended use of the property. Each municipality has their own zoning ordinances, so what is fine in one area may not be in another. Additionally, having a survey to determine boundary lines may be important to the buyer thinking of erecting a home addition, fencing or even a separate building.

7. APPRAISAL: As a part of the loan approval process, the lender will require that the property be appraised to ensure that the value of the property is adequate to justify the loan. Another possibility is that the appraiser cites repairs that need to be completed in a workmanlike manner and re-inspected at an additional cost.

8. RENEGOTIATIONS? Although not always necessary, after the due diligence is complete and the reports are received, the buyers have the right to ask the sellers to address any concerns they have about the property or come to any other mutually agreeable resolution of the issues. If no resolution is reached, the sale may be terminated.

9. MORTGAGE COMMITMENT: When the appraisal has been completed and approved and the lender has verified the buyer's income, credit, etc., the lender can then make a decision on loan approval. Both listing and selling agents will work to ensure that all necessary steps are taken to reach this point.

10. SETTLEMENT COMPANY/ATTORNEY: A settlement company and/or an attorney specializing in real estate will conduct a title search, issue title insurance, prepare the new deed, and handle the calculations of the closing disbursements, receipt and distribution of all monies in the transaction.

11. UTILITIES TRANSFER: Prior to closing, the sellers notify the utility companies to cancel their services on that day and the buyers make applications with the various utilities and ask that their services be established on that same day.

Careful planning and coordination are essential to ensure a smooth, successful closing process. During this critical period, your CENTURY 21 Frontier Realtor® will prove to be a valuable asset.