On your mark, get ready, close!
You're almost there. You've found the home you want to buy. You've made an offer. The seller has accepted. Now you're on the home stretch. Be sure to do the following tasks for a smooth close
of escrow.
Clear contingencies
When you and the seller signed the sales agreement, more than likely it contained contingencies, that is, conditions that had to be met for the property to change ownership. Contingencies often revolve around financing and assuring that the home is in an agreed-upon condition.
Financing contingencies typically include securing a home loan, which may involve selling your current property so you can afford the new one.
Inspections depend somewhat on the location and condition of the property, but most folks get the following: pest and fungus, mold, roof, septic, well, and home inspections. If the house is built on a hillside with a precarious overhang, they may ask a structural engineer to assure the home's stability. People also get public records inspections as part of the natural hazards disclosure to determine whether the property is in a wildfire area or near a military ordinance location.
To clear contingencies, you'll need to make sure you've resolved any issues regarding the loan commitment and that all the inspections were completed — and any problems were addressed to your satisfaction according to the terms of the sales agreement.
Review your closing disclosure form
Usually about three days before closing, your lender will send you a form that outlines the terms of your home loan, everything from the amount and interest rate to mortgage fees, estimated taxes, insurance, and other terms.
Any time you review documentation, you actually need to read it. As I've said a million times, the large print giveth and the small print taketh away. For example, did you notice that your lender won't fund the loan until your homeowner's insurance is signed, sealed, and delivered? Sometimes that's in the small print, and it would be a bummer to overlook such an important detail.
Do a final walk-through
After all parties sign the sales agreement, you may not visit the property for a month or two, especially if the current owners are still living there. However, you should not sign papers without seeing the property to assure it is in the condition you expect. Now and then things happen that can dramatically affect the value of property, like a new driver accidentally driving through the garage door while visiting the seller's 16-year-old daughter. Once you sign papers, that property belongs to you — busted garage door and all.
Bring necessary documents
Arrive at the escrow company with all the signers. If your kind Aunt Mathilda is providing you with a gift of money for the down payment, she doesn't have to be there unless she plans to hold title with you.
All signers will have to prove their identity with a notary, so be sure everyone brings valid identification: a current driver's license or a valid passport usually works well. If you haven't already, now will be the time to hand over a check for a significant sum to the escrow officer that includes the down payment and your share of closing costs.
Closing costs can be as much as 3% of the purchase price because they include fees for title insurance, escrow, loan origination, loan discounts, inspections (if paid out of escrow), fire insurance, and proration of property taxes.
Typically, you'll need a cashier's check rather than a personal check — or you'll need to arrange for wire transfer after confirming routing and account numbers with your escrow officer. Your Realtor will help you plan ahead so you know what to bring and can get everything done on time. This is one of the many reasons you should hire a Realtor whenever you buy property.
Big purchases call for extra care
When you arrive to sign documents, be prepared for a tall stack of paper, maybe eight inches thick. Take a deep breath and dig in. Read carefully. This is likely the biggest purchase you've ever made — not a good time to skip the details.
Transfer utilities
If you plan to move in directly after escrow closes, be sure to transfer utilities into your name. It'd be a bummer to arrive with all your belongings, only to find you have no heat, light, or internet connection.
If you have questions about property management or real estate, please contact me at rselzer@selzerrealty.com or call (707) 462-4000. If you have an idea for a future column, share it with me and if I use it, I'll send you a $25 gift certificate to Schat's Bakery.