Escrow, Inspections, Appraisal
Upon accepting a buyer's offer to purchase your house, the buyer will put earnest money into escrow. This begins the inspection and appraisal phase.
Before a buyer actually completes their purchase of your house, they are typically given a set amount of time to:
- Inspect the property
- Obtain financing
- Secure insurance
- Review preliminary title report and all disclosure documents
At the successful conclusion of each of these steps, the buyer will either remove the corresponding contingency or request a renegotiation of the terms of the contract (often the price) based on what they have learned. An objective, experienced agent can help you make an informed decision on how to respond to the buyer.
Q: What is Escrow? When you accept a buyer's offer, their earnest money (deposit) is temporarily held in escrow (a holding account) by a third party (usually a realtor or title company). Once the sale is official, you will receive a check for the proceeds from the sale of your house. This check contains the earnest money that has been held in escrow, and the escrow account is closed.
Q: What kind of inspections should I expect? The buyer has the right to have a wide variety of property inspections to determine the property's condition and the cost of any impending repairs or upgrades. Inspections may include roof, termite/pest, chimney/fireplace, property boundary survey, well or septic. You are entitled to a copy of any of their inspection reports.
Q: How do I know a buyer can afford to purchase my house? We recommend accepting offers from buyers who have a lender's pre-approval letter, which is stronger than a pre-qualification letter. Later, the lender will send an appraiser out to the property, to ensure the property is worth the sales price.
Q: Title reports, disclosures, encumbrances...help! Before the sale can be finalized, someone has to make sure every lein (encumbrance, claim) on your property is addressed. A title company (hired by the buyer) will research the complete recorded history of your property, making sure the title is free and clear of all encumbrances by the date of closing, and that all new encumbrances are properly added to the title. The title company also supplies a number of documents and facilitates the closing.
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