As your Realtor®, I will guide you through all of your contractual requirements
and coordinate with inspectors, appraisers, attorneys, the seller's agent, etc.
Following is information on steps that take place, in their respective order, so
that you'll know what to expect along the way. (Note: The word "attorney," used
herein, is synonymous with “closing agent” or “settlement agent.")
1. Ratified Contract
The contract is "ratified" when all parties have signed and/or initialed all
terms. Upon ratification, the clock starts on contractual deadlines, such as
written loan application, inspection, and deposit, if not already collected.
Your deposit is held in my company's escrow account
(unless specified otherwise in the contract) and applied to your down
payment at closing. I'll send a copy of the contract to your lender and attorney.
2. Written Loan Application
Must be made within 7 days of ratification. The lender requires the
appraisal & credit report fee upfront, typically $450-$500, but it has
become customary to wait to pay until after inspection (see below) to
collect for and order appraisal. Please keep in mind that the loan officer
will need several items from you. The sooner you get the requested items
to the loan officer the quicker the process will be. Typical documents
needed are: most recent tax returns for 2 years, most recent W-2, 1099 or
K1 for 2 years, 1 month paystub, most recent bank statements and/or asset
accounts for 2 years, 401K statement and terms & conditions (if applicable),
divorce decree or separation agreement if there is child support or alimony
being paid. There may be additional documents needed by your loan officer.
At your expense and within 10 days (or as otherwise specified) of contract
ratification. You may use an inspector of your choice or I can make a recommendation.
The inspection fee is payable at the time and usually costs $300-$400, depending on
the square footage. I will be present and can forward the report to you, if you are
unable to attend. The seller is typically not present, to allow you and the
inspector to freely discuss the property's condition. Should you desire any
repairs, we must provide a copy of the inspection report and a written request
within the same time period (1 draft the request in the form of an addendum to
the contract). The contract outlines a period of negotiation thereafter. Any
agreed-upon repairs must be completed prior to closing and you have the right
to inspect repairs. Alternately, the seller may sometimes offer additional
closing cost contribution in lieu of repairs. We'll discuss the options in more
detail after inspection.
4. Appraisal & Title Search:
Once inspection repair request negotiations are complete, the lender
orders the appraisal and buyer's attorney orders the title work. The appraiser
arranges access through seller's agent. Don't be surprised if the appraisal
comes in right at or just above the purchase price. Should the appraisal be
less than the purchase price, there are 3 options. You can pay cash for the
difference (unlikely), the seller can reduce the price, or the contract may
be terminated with neither party deemed to be in default.
5. Homeowner's Insurance
You are required to have homeowner's insurance if you are obtaining financing for
your new home. Typically your current insurance carrier will offer you the best
rates, but I always advise to check around to insure you are getting the best rate.
The agent name, contact phone number & company needs to be provided to me and your
lender about 23 weeks prior to closing so that the insurance binder can be ordered.
6. POA or Condo Disclosure Packet
Ordered by seller's agent and delivered to you or me via
electronic link, courier, parcel delivery, or mail if the property is in a neighborhood
that has a homeowner's association. You have 3 days from receipt or 6 days from postmark,
if mailed, to review the packet and terminate the contract, should the contents be
objectionable. No reason need be given, but written notice to terminate must be
within the 3 or 6 day timeframe. If no packet is available, you have the same time
period, from notification of unavailability, in which to terminate. There is no
deadline in which the seller must provide the packet, but most like to get this
done quickly, so as not to lose marketing time, should the buyer terminate on this basis.
7. Well, Septic, (unless public) & Wood Destroying Insect (aka WDI or Termite)
Customary for seller to provide at seller's expense. (Well & septic not required on public systems.)
The well/septic certificate must be dated within 30 days of closing, so seller's agent orders these
about 2 weeks prior to allow for closing delays. The septic is a "walk-over" of the drain field.
The WDI certificate is issued based on a visual inspection.
8. Utilities & Moving
About a week before closing, start arranging forwarding mail and setting up
utilities in your new residence, effective as of the closing date. Don't forget
items such as cable/dish service, trash pick-up, propane/gas, and electric. Closing
delays happen frequently, so bear in mind that services requiring your presence
(such as cable) may need to be rescheduled in the event of a delay.
The day before or morning of closing, a settlement statement (HUD) is prepared showing
all charges and credits. Both agents and attorneys will review this for contractual and
mathematical accuracy. We will do a final "walk-through" either the day before or just
prior to closing to make sure the house is broom clean and in the same condition
(except for agreed repairs) as of the time of contract. It's no longer customary for
a seller to attend closing, as they usually sign the deed in advance, so closing will
be scheduled at a time convenient for you.