Title Work, Inspections and Appraisal

You as the purchaser will select a title company as a closing agent. The closing agent will hold any earnest money and will research the complete recorded history of the property to ensure that the title is free and clear of encumbrances by the date of closing and that all new encumbrances are properly added to the title. Some properties are subject to restrictions which limit various activities such as building or parking restrictions. There may be recorded easements and encroachments, which limit the rights to use your property.

You may wish to consult an attorney or tax advisor on the best way to hold title. Different methods of holding title have different legal, estate and tax implications, especially when selling or upon death of the title holder.

Once your offer is accepted by the seller, you will need to have a licensed property inspector inspect the property within the time frame that was agreed upon in the effective contract to purchase. A basic home inspection analyzes the overall safety and general condition of the house, but additional types of inspections include termite, radon, well and septic (the latter two are only applicable if a well or septic are present). The buyer should always remember that no home is perfect, and an inspection is not a matter of passing or failing, rather the inspector is looking for items that are unsafe, not functioning properly, significantly deficient, or near the end of their service life. Our agents will often send buyers examples of inspection reports so that they can be more prepared. Especially for buyers who have never seen an inspection before, this can be a very overwhelming and stressful process. It is important to note  that inspectors don’t test or inspect certain items like sprinkler systems or pools, and due to liability reasons they are not able to do certain things like light a pilot light or move the seller’s personal property to gain access to an item they typically inspect. You may elect to have different inspectors inspect the property, if you wish to obtain professional opinions from inspectors who specialize in a specific area (eg. roof, HVAC, structure). If you are purchasing a commercial property, then you will need to have an environmental audit done on the site for the lending institution. We can recommend several different inspectors but always suggest buyers do their own due diligence when selecting their inspector.

Once you, as the buyer, have received your inspection report and gotten the opinion of specialists, if applicable, we enter a new stage of negotiations. You can choose to continue closing as-is, request repairs, negotiate a credit, or back out of the sale altogether, but this all depends on the initial contract and the concerns on the inspection report, all of which your agent will assist you with. For government financing types like VA or Federal Housing Administration (FHA) loans, an appraiser may request certain repairs to proceed with the application.  

It is imperative that you keep in close communication with your lender. They will let you know when additional documents are needed to approve your loan application and fund your loan. If the agreement is conditional upon financing, then the property will be appraised by a licensed appraiser to determine the value for the lending institution, via a third party. Unlike your inspector, you cannot select the appraiser when you are financing a home. This is different in a cash transaction–not only is an appraisal not required, but a cash buyer can select their own appraiser should they want an appraisal. 

The appraisal is done by the lending institution so that they can confirm their investment in your property is accurate. Appraisers are specialists in determining the value of properties, based on a combination of square footage measurements, building costs, recent sales of comparable properties, operating income, etc. Throughout the process, your agent will be checking with your lender to be sure the loan is going through smoothly and on time; however, when the lender requests items or information from you as the buyer, it is important that you respond quickly to keep to the timeline. 

If you are obtaining a loan, you will be required by your lender to purchase a certain amount of insurance on the property. The value will depend on the lending institution and the purchase price of the property. You may be able to save hundreds of dollars a year on homeowners insurance by shopping around for insurance. We will be happy to recommend experienced knowledgeable insurance agents for every property type.