Your offer has been accepted and the goal is now to get escrow opened and closed. This is not as simple as it seems. Many real estate transactions get to this point but never end up closing. When you talk about a real estate transaction “closing” that means the new owner has been recorded on title and has taken possession of the home. The transaction is not finished until it closes.
Get Escrow Open ASAP
Upon receiving an accepted contract from the seller, immediately take steps to open escrow. Escrow will have been chosen in your contract. Either you specified your escrow officer or you let the seller choose. Either way, have your broker find out who the escrow officer is and get a copy of the fully executed contract and the actual deposit check over to escrow.
Your escrow officer will get escrow open and deposit your deposit check into their escrow trust account. They will also notify you that escrow is open and send you a file number.
Choosing the Inspector / Get a Home Inspection
If it sounds familiar, it’s only because we’ve been beating this dead horse, GET A HOME INSPECTION. It is that important. Skipping a home inspection could prove to be the most costly mistake you could make. If you don’t know a good home inspector, start with referrals from your real estate team. Your experienced real estate broker can provide a referral from a past transaction.
You can also search online using the tools we’ve already provided you with. Check websites like Google for searches of “Home inspectors in (city name)”. Go to servicemagic.com and search for a home inspector in the zip code of the home you are purchasing. After you choose your inspector, search that inspector online to see if there are any reviews. Remember when reading reviews that the only people who write reviews are typically either VERY mad or VERY happy. Take it with a grain of salt; just make sure there are no very bad, seemingly legitimate reviews.
After you get the inspection report back, read it thoroughly and go through any questions you have with your real estate broker and home inspector. If there were hidden things (items you did not know about before making an offer) you can try to work something out with the seller. A couple solutions are for the buyer to receive some form of a credit for later repairs, or the repairs be completed and the contractor paid at closing out of a combination of seller and buyer funds.
THIS IS NOT AN OPPORTUNITY TO RETRADE. As we covered earlier, a retrade is when you offer one thing, then later once escrow is opened, you request a reduction of some sort. If the pool was empty and clearly in disrepair when you toured the home, do not use the inspection as a reason to ask for a $10,000 reduction because the pool needs repairs. If you knew about it when you made your offer, do the right thing and stand by your offer. If you did not know about an item needing repairs on the inspection report, those are the items you should negotiate on.
Title Searches, Title Reports and Title Insurance
Upon opening of escrow, the escrow officer will order a preliminary title report. This is a report detailing the ownership and description of a property. It will have a legal description, show the current owner, and show all recorded documents against it. Some items that you would expect to see are:
- Real Estate Taxes Owed and Tax Liens
- Mechanics liens, if any
- Covenants, Conditions and Restrictions (CC&Rs)
- Current Mortgages or Deeds of Trust
- Easements – a right of an owner on the property of another owner. An easement could allow you to use someone else’s property or it could allow someone else to use your property.
- Encumbrances – a burden against the property such as money owed, like a mortgage
Post Offer Acceptance Advice for a Timely Close
- Don’t Make Big Purchases – Believe it or not some people actually buy cars while their loan is in underwriting! Do not do anything to change your financial status in any way until you have completed your purchase.
- Get Your Lender Everything ASAP – The funding of a loan is the last step in your home purchase. Do everything you can to get the loan done as quickly as possible.
- Stay on Top of Your Lender – Your lender should provide you regular updates on the status of your loan. If this does not happen automatically, request updates from your lender until the process is complete.
CONGRATULATIONS!
You are now a property owner!
By following our advice, you hopefully will have secured a great deal on an investment property and avoided making costly mistakes.
We hope you find this resource helpful as you begin your journey into real estate investing. If you have any questions or feedback about this resource, please e-mail paul@capropertyfinder.com.