What a Typical Family Buying a Home Might Expect to Experience their Purchase Transaction after Escrow Opens
THE BEGINNING: Escrow will be opened by the Realtor whose chose the escrow company per the Residential Purchase Agreement. Your good faith deposit must be delivered to escrow typical within 3 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 you won’t have any problems with this near close of escrow. Have your insurance agent contact the escrow officer with confirmation of the underwriting in case there are any issues with the property selected so you and your agent have ample time to work on solutions. 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.
DISCLOSURES: Several disclosures will come to you throughout the escrow process for normal Seller to Buyer sales for your review. Make sure you open and read all messages coming to you as it gets to you, as these issues are all assigned deadlines for your protection, and if you 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 let your agent know right away!
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) 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. Track the progress of your loan. 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 is required to provide you a copy of it if you require 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 make a decision who you have chosen for your Physical Inspector, within the first 2 days after your offer has been accepted. Whomever you choose to utilize, let your agent know who you have chosen as the agent will need to confirm if that 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 him 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 you 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 your agent so you can decide which items to ask the Seller to repair. Then, your agent will create a written request that you will need to sign so that it can be sent 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 may not allow for a Repair Request.
THE PEST INSPECTION: The Seller will likely 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 specialist. 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 active infestation. 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 you may find them confusing. If that is the case, do not hesitate to call the escrow officer and she 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/Escrow/Title will provide you with the title report, 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 two 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 information is on the first page of the report. 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 coverages. Please counsel with the title officer for which will be best for you and then notify the escrow officer or me 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.
HOME OWNER WARRANTY: This is the warranty that the usually pays for that covers many systems in your home and that you or the seller are paying for. Should you want to consider buying extra coverage over and above what was called for in your contract you should be able increase the policy before escrow closes or within 30 days of close directly with the company.
LAST WEEK BEFORE CLOSE/LOAN DOCUMENTS: You will need to be available to sign your loan documents 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 officer have agreed upon. If you reside/work far away from the escrow company, you can request from escrow a 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 you cannot hold up the closing if the Seller has not done exactly what they promised to do. 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 move the utilities into your name on the close date.
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. 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.
ENJOY YOUR HOME!