This is a break-down of most of the highlights of what happens during the course of an escrow and makes reference to how we service our clients. Since most terms in a real estate contract can be negotiated for various reasons this should be read as a generic guideline as each home purchase is unique given the buyer, seller and home are unique in their own right.
THE BEGINNING: You will receive an introductory email or call from our team, with a timeline of deadlines and soon after any initial forms we may need for you to sign. Escrow will be opened by the agent whose side chose the escrow company per the contract. This is usually the listing or seller's agent’s side. Your good faith deposit check must have funds available to back it up once escrow is opened, and you will need to deliver the funds to escrow within three days of acceptance of the offer.
INSURANCE: Make sure you contact your insurance agent to order coverage for your property early in the process so we won’t have any problems with this near close of escrow. Have them contact the escrow officer with confirmation of their underwriting. Make sure your insurance agent sends their investigator out to view the property and its location early on, if required, so your policy won’t be cancelled at the last minute due to underwriting issues. You will need fire/hazard, liability and personal property coverage for a home, and usually all but fire/hazard insurance for a condo where the HOA covers that in their Complex’s Master Policy coverage. You will need to confirm this with the HOA/Propery management, whose contact information is usually visible on the listing, or we can get it for you. It can also a good thing, when buying a condo to include what is called “Loss Assessment Coverage” which covers you in cases where the HOA Master Policy won’t cover a loss and the HOA wants to assess you for it.
DISCLOSURES: We will be processing several disclosures to you for normal Seller to Buyer sales for your review. Make sure you open and read all mail coming to you as it gets to you, as these issues are all assigned deadlines for your protection, and if we don’t object to one that is not livable to you within the dictates of the contract, you could inadvertently give up that protection of contingency. Make sure if you read something that is not acceptable to you, that you call us right away!!! ****When purchasing an REO, Foreclosure, Short Sale or Probate/Estate property, these sellers are exempt from disclosure to you, which makes it VERY important that you investigate everything of concern to you yourself.
YOUR LOAN: It is especially important for you to get with your lender quickly once your offer is accepted to get all documentation the lender needs for final approval of the loan. It is also important that you choose your loan program in a timely manner and that you discuss with your loan officer when it is best to lock your rate. This varies in a short sale transaction or in a case where the seller is trying to purchase another property, again all transactions are unique. If you put off shopping for rates for too long, you may endanger your agreed upon closing which could present a costly problem for you with your seller. Your lender should order the appraisal very soon after escrow opens. This will be a cost to your side of anywhere from $350-500. Your lender can provide you a copy of it. Be sure to NOT make any large purchases any time before close of escrow as it could change your debt ratios and bump you out of the deal altogether.
THE PHYSICAL INSPECTION: It is important for you to let us know who you have chosen for your Physical Inspector, within the first 2 days after your offer has been accepted. Whomever you choose to utilize, we will need for you to let us know who you have chosen as we will need to confirm that the appointment will be suitable for the seller, too. If you work during the week, the appointment can be set for lunchtime, as the last inspection of the day is usually no later than 3pm. Some Buyers prefer to come during the last half hour of the inspection at which time the inspector will show you all he has found, and will save you a great deal of lost job time waiting for him to get done. At that time, you can also ask the inspector any questions you may have about the property. Some Buyers prefer to be there for the whole inspection. This is your choice.
AFTER THE INSPECTION: The inspector will give you a short verbal report on the day of the inspection talking about the highlights of the inspection. The full written report should come to us that day, or the next depending on how that inspector works. You will need to review the report as quickly as possible, and then call us so we can decide which items to ask the Seller to repair. Then, we will create a written request that you will need to sign so that we can send it to the seller’s agent. You need to know, that each Seller and situation is different as to what the Seller is willing or able to do regarding repairs and that repairs are a negotiable point between both parties. Sometimes they are willing to credit moneys in lieu of repairs and sometimes they are not. Probates, Estate Sales, Foreclosures, REO’s and Short Sales are different kinds of animals, and while we are always ready to test the seller to see what they will and won’t do, many times these distressed property sellers will not do repairs.
THE PEST INSPECTION: The Seller will be performing a termite and dry rot inspection for you. This will determine if there is any active infestation of those two pests, and also the possibility of mold. (Which may then have to be further inspected by a contractor or environmental hazards mitigator.) You will receive a copy of this report per the contract. If there are any repairs for active infestation called for in the report (called Section 1) the Seller should do them before close of escrow in order for that Pest company to certify the house as being clear of infestation. (Unless you are buying a short sale or foreclosure/REO property, in which case it varies from bank to bank.) Escrow cannot close without that certification unless otherwise agreed to in the contract. Unless you are getting some types of FHA or VA loans, Section 2 items or conditions that may lead to infestation will be at your expense.
ESCROW INSTRUCTIONS: When you receive the escrow instructions in the mail, you may find them very confusing. If that is the case, do not hesitate to call the escrow officer or us and we will help you with them. In addition to the escrow instructions, that packet also contains several different kinds of forms which are all mandatory and time sensitive. If all these forms are not completed and returned quickly, it may delay your closing. If you find any mistakes in them, you need only to call the escrow officer and they will be corrected.
THE TITLE REPORT: The Seller will provide you with the title report via escrow, which describes what items have been recorded against the property and what the title company will and won’t insure. It should come to you approximately 2 weeks after escrow opens. If it is late, please let the Escrow officer know. If there are any items in the title report that concern you, it is best for you to call the title officer directly for an explanation. That contact information is on the first page of the report. If you are having trouble getting satisfaction on either, do let us know. Note that the coverage the seller buys for you is the minimum coverage. There is usually a page in the PR that goes over the different coverage. Please counsel with the title officer for which will be best for you and then notify the escrow officer or us should you wish to change the coverage and pay the difference.
CC&R’S & HOA PAPERS: The Codes, Conditions and Restrictions (CC&R’s) should be attached to the title report. You will usually get CC&R’s even if you are not buying a condo. If you are buying a property that is also governed by a Home Owner’s Association, you should also get separate from the CC&Rs the homeowner documents (minutes of the meetings and financials) from escrow under separate cover. If you have not received the homeowner documents at least 2 weeks before close of escrow, please call us or the escrow officer and ask about it.
HOME OWNER WARRANTY: This is the warranty that the seller usually pays for that covers many systems in your home and is worth every penny (and more) that you or the seller are paying for it. Should you want to consider buying extra coverage over and above what was called for in your contract, just let us know before close of escrow and we can add it to the policy. With some of the companies, you can add coverage within 30 days after the close of escrow, but if you want that expense reflected in your escrow closing documents, it is best to have it taken care of before close of escrow.
LAST WEEK BEFORE CLOSE/LOAN DOCUMENTS: You will need to be available to sign your loan docs at escrow in or near the last 10 days before close of escrow. The Loan Docs are your contract with the lending entity that is giving you the loan. Make sure it is as you and your loan rep have agreed upon. If you reside/work far away from the escrow company, you can request from escrow a doc signing service where a notary comes to you for your signatures. This will cost anywhere from $150-200. Should there be a mistake on the loan docs, be sure to call your loan rep from wherever you are to get corrections or questions answered. Sometimes loan docs are saved digitally by the loan entity. If this is the case, and if there is enough time, you can ask your rep to have them emailed to you for review before you sign them. Keep in mind that loan docs, just as your rate, have a shelf life after which they expire, and are also costly to re-write.
WALK-THROUGH is also in that last week, and I or your agent will set that up with you directly. At that time, you have your opportunity to make sure that all the repairs the Sellers agreed to do have been done and that there has been no additional damage since you purchased the property. Keep in mind that walk-through is not a condition for closing, so we cannot hold up the closing if the Seller has not done exactly what they promised to do. (Don’t worry, as there are other ways of getting the Seller to do what they promised.) Hopefully the seller will be at the walk through to show you how things in the property work, however sometimes this is not possible. **** You also need to call the utility companies before close date to have them roll the utilities over into your name on the close date. If you do not do this before the Seller’s responsibility ends for them, it will be more expensive for you to restart them.
THE CLOSE: There are two ways to close. 1. The loan “funds” the day before close and then the morning of the close it is recorded at the county recorder. It is not considered final until we have been informed by title or escrow that recording has been confirmed. That can happen anywhere from 10am to 1pm that day. 2. A “special” closing is when you fund the morning of the day of close and then record late that same day. (Special closings are not generally done in California anymore) In special recordings, we sometimes do not get confirmation until late that night or the next morning. We won’t know which type of closing that will happen in our transaction until we get close to that day. Your agent and I will be in touch with you on our expected close date to keep you well informed. It is imperative that you do not enter the property to leave personal property there or to change the property in any way before your agent has told you the closing is recorded as that is the only time the property is considered yours legally.