OFFERS AND COUNTEROFFERS
Once you find a property that you like, we will explain and draft the purchase agreement with the terms and conditions you agree upon. The purchase agreement will include your price, down payment, length of escrow, and performance for contingency periods, among other terms and conditions. The seller may change or counter some of these terms. Once the terms and conditions are agreed upon by you and the seller, you have an accepted offer.
ESCROW
Once your offer has been accepted several things will happen. Be aware that the counting of days specified in the purchase agreement for any buyer and/or seller performance will generally start counting the day after mutual acceptance. Thus if the parties signed off on a Monday, the clock will start ticking on Tuesday.
Escrow will be opened with an escrow company selected during negotiations identified in the purchase agreement. Essentially, Escrow is an arrangement in which an impartial third party, called the escrow holder, holds legal documents and funds on behalf of both parties during the real estate transaction. The escrow holder distributes the documents and funds according to the instructions set forth in the purchase agreement. The escrow holder acts as an intermediary between the parties and cannot act upon the unilateral instruction of either party.
INSPECTIONS
General Inspection
One of the terms you and the seller will have agreed upon is your right to inspect the property. Pursuant to the purchase agreement, you will have a specified number of days to conduct your inspections. The time period is called the physical inspection contingency. Once the period of time expires, you will have to approve or disapprove the physical inspection.
You should have a qualified inspector investigate the property while you research the surrounding neighborhood. We can provide you with several qualified inspectors. An inspector may charge between $200-$500 depending on the size of the property, and payment is due at the time of the inspection. A general home inspector will investigate the major systems of the house from the basement to the roof, including foundation, roof, plumbing, heating, cooling, electrical systems, mechanical, windows, insulation, security, pool/spa, and the visible structure of the house. If there are problems with any aspect of the home, the inspector generally will suggest that a specialist conduct a further inspection. Additional inspections you may consider include roof, foundation, mold and structural and/or geological, and sewer inspections. Again, we can provide you with specialists if further inspections are needed.
Don't be alarmed if the inspector discovers problems or defects with the home. We have never seen a home inspection without some defects. We will work with you to determine reasonable requests for repair from the seller or even a monetary credit at the close of escrow. If you and the seller cannot reach an agreement, you have the right to cancel the escrow at this time.
Termite Inspection
The purchase agreement provides for a termite inspection and report and a Wood Destroying Pest Addendum allocates repairs between the parties. In general, the seller pays for the termite inspection and provides the buyer with the termite report. This report reveals any termite infestation or dry rot on the property. Generally, buyers ask the seller to pay for the repair of any active infestation or dry rot, called "Section I" repairs. Buyers generally pay for preventative work that the termite inspector may recommend, called "Section II" repairs.
DISCLOSURES
Sellers are required by law, unless specifically exempt, to provide you with various disclosures regarding the real property being purchased which includes the structure itself and the property (land.) The Transfer Disclosure Statement (TDS) discloses information which affects the property in one of two ways: disclosures that affect a property's value and/or those that affect salability. A leaky roof affects value, having a day care center next door affects salability. Sellers are required to disclose any information they know about the property but are not required to inspect the property to provide you with disclosures. These disclosures are legally significant. The state of California mandates that all buyers shall have 3 days from the receipt of these disclosures to disapprove them and cancel their contracts, retrieve their deposits and all with no further responsibility to the seller.
The Natural Hazards Disclosure discloses facts about the land and surrounding area by revealing areas of potential flooding, seismic study or active fault zones, areas of liquefaction and high fire severity among others.When the seller provides you with disclosures for the property, we will review them in detail with you.
APPRAISALS, INSURANCE AND PERMITS
Upon mutual acceptance you should be in immediate contact with your lender. We will provide them with a fully executed copy of your purchase agreement (including all counteroffers and amendments.) Your lender should immediately arrange for an appraiser to visit the property. An appraisal is an inspection of the house to determine its value, so that the lender can determine whether the value of the house equals the amount you are borrowing (ie, how much money it may lend.) The appraisal is paid by the buyer who receives the copy of the report.
At the same time you should also be in contact with your insurance agent to begin the process of insuring your purchase. Virtually all lenders will make insuring of the property a condition of funding the loan. We can provide you with several well-qualified insurance agents. If you will be making structural modifications to the property, we will help you obtain information from the local department of building and safety regarding plans and permits.
LOAN COMMITMENT
Assuming that inspections have been conducted and finalized and the inspection contingency waived, in writing through escrow, it is vital that communication between you and the lender not falter. Keeping in touch is a key requisite to making sure the loan process is not delayed. We will be in contact with your lender as well. It should be your goal to get the lender's loan commitment in writing as quickly as possible. This may or may not mean that you will be approved for your loan while not actually locking in a specific loan rate.
FINAL WALK-THROUGH
The purchase agreement includes a provision that allows you to do a final walk-through of the property prior to the close of escrow, usually within 5 days of the close. The walk-through is not an additional inspection contingency, but ensures that the condition of the property is the same as when you first purchased it and ensures that the sellers have complied with the purchase agreement. If not, the walk-through allows us to remedy any problems prior to the close of escrow. During the walk-through, we will make sure that everything the seller agreed to leave is at the property and operable and that if the sellers have moved out, they did no damage to the home. To minimize major surprises, we will schedule the walk-through as close to the actual closing date as possible, preferably after the sellers have moved out. If possible, we suggest a walk though prior to signing final loan documents.
Two days before the close of escrow, the lender will send escrow funds for the purchase, called "funding," and the following day the city records the new grant deed with your name as the owner and escrow is closed.