Home Buying Process - Contract to closing.
The steps below are typical of those you'll follow from your initial contract to your closing:
1. LOAN APPLICATION:
Immediately after they negotiate the contract, buyers should apply for any
financing necessary to complete the purchase. The agent's advice can help them select a reputable lender whose products and service best meet their needs.Notification of loan application is passed to the listing agent, who keeps the seller informed as the process progresses. During this process, buyers must furnish the lender pertinent information regarding their assets, income, debts and credit history.
2. HOME INSPECTION AND REPAIR RESOLUTION:
The rise in the importance placed on home inspections is probably the most significant change that has occurred in the home selling process in
recent years. Typically, the process involves a top-to-bottom inspection of the property, performed by an inspector who is chosen and paid by the buyers. After the buyers review the report, they have the right to ask the sellers to address any concerns they have about the property. This is done during the Due Diligence Period which is part of the Purchase & Sale Agreement.
3. DUE DILIGENCE:
During this period, seller grants the buyer the option of terminating the agreement for
any reason. Buyer may arrange financing, conduct evaluations, inspection, appraisals, examinations, surveys & testing. During this period the buyer may also inspect for active termite infestation. This process can easily amount to a complete renegotiation of the contract. The role of the listing and selling sales people is critically important to successfully negotiating this often difficult process.
As a part of the loan approval process, the lender will require that the property be appraised to ensure that the value of the property is adequate to justify the loan. Although the buyer and seller have already agreed on a price, the appraiser's evaluation must support that price.
5. LOAN APPROVAL:
When the appraisal has been satisfactorily completed and the lender has verified the buyer's income, credit, etc., the lender can then make a decision on loan approval. Both listing and selling agents will work to ensure that all necessary steps are taken to reach this point.
6. CLOSING ATTORNEY:
When the loan is approved, an attorney specializing in real estate must be selected to prepare for and conduct the closing. The closing attorney is selected according to the contract and the lender's requirements. Among other items, the attorney will check the title to the property, prepare necessary paperwork, and handle the receipt and distribution of all monies in the transaction.
7. TERMITE INSPECTION:
Most contracts require the sellers to furnish a termite clearance letter to the buyers. A licensed pest control operator must certify that the property is free from infestation by termites or other wood destroying organisms. If infestation is discovered, treatment and repair may be required. The cost of this inspection and any repairs is determined by the terms of the contract. The cost of the termite clearance letter is usually the responsibility of the buyer.
8. HOMEOWNER'S INSURANCE:
If the home will be subject to a mortgage, the buyers must arrange for a homeowner's insurance policy covering the property. The selling agent will help the buyer make sure that the coverage is adequate to satisfy the requirements of the lender. These arrangements must be made prior to closing and the policy must be present at the closing.
9. RE-INSPECTION OF REPAIRS:
In the event the seller is required to make repairs, sellers should be careful to hire reputable repairmen and keep good records of completion and payments involved. Buyers will normally have the property re-inspected to ensure satisfactory completion.
10. UTILITIES TRANSFER:
Prior to closing, both buyers and sellers should arrange to have the utilities
transferred from one to the other. To accomplish this task, a date (usually the possession date) will be agreed upon for the transfer. The sellers notify the utility companies to cancel their services on that day. The buyers make applications with the various utilities and ask that their services be established on that same day.