Buying

The buying process. Your offer was accepted! You are actually on the road to buying that turn-of-the-century Victorian on Penniman Avenue in downtown Plymouth that you love so much! Or that home on the Huron River in Ann Arbor that you’ve always dreamed of. Or that home in Canton a short drive from the largest high school campus in the United States.

What happens now? What happens between the seller signing your offer and you moving into your new place? Here is a list of the highlights of what we call “contract to close;” on this page, we’ll cover these 10 points, in order.

  1. Schedule and complete your home inspection
  2. Have a radon test conducted and obtain the results
  3. Complete all other due diligence items
  4. Obtain your formal loan approval
  5. Schedule your closing
  6. Schedule your move
  7. Obtain and review your closing documents
  8. Arrange your funds for closing
  9. Attend the closing
  10. Move in

1. Schedule and Complete Your Home Inspection

Before we get into the common misconceptions about what inspections are NOT, let’s talk about what they ARE. The primary purposes of an inspection are:

  • To discover issues affecting safety and habitability
  • To discover items not already properly disclosed by a seller on their Seller’s Disclosure Statement
  • To help a purchaser determine if they want to consummate the contemplated purchase
  • If the volume and or nature of the inspection findings are sufficiently negative, whether the buyer should request a price adjustment from the seller

Those things said, the purpose of an inspection is not for the seller to repair every item found during an inspection, particularly those things already properly disclosed by the seller on their Seller’s Disclosure Statement.

And while an estimated 70 percent of all homes sold annually involve a home inspection, a surprising amount of confusion remains over what the process does, and doesn’t, involve. Here are seven common misconceptions about home inspections:

  1. Licensing ensures a professional home inspection. Not necessarily. Currently, 29 states have some form of inspector regulation – but state requirements vary widely. Verifying the inspector’s credentials, experience, and adherence to professional standards is still important, even in a state with licensing.
  2. A home inspection is designed to identify problems that might be the basis for renegotiating the purchase offer. That is not its main purpose. The inspector’s service is primarily one of education, providing buyers with a better understanding of the physical condition of the home and giving them the knowledge to make smart decisions. The inspector’s observations or recommendations might help to dispel buyer anxieties and provide useful home repair and maintenance suggestions. When areas of concern or problems are identified, the inspector should play no role in fixing them or addressing them with the seller.
  3. Home inspections are needed for existing homes only. Unfortunately, no. New construction is often the most in need of a thorough inspection. Many professionals offer “phase inspections” in which the property can be checked at various stages of completion.
  4. Having an appraisal, code inspection, and termite or other hazard inspection eliminates the need for a separate home inspection. Usually not.. While each of these inspections is valuable, these should never be used in place of a complete home inspection. Similarly, a home inspection should never take the place of other prescribed inspections. To suggest otherwise is dangerous for your client and creates serious risk for you.
  5. Home inspections are for the buyer. It’s true, most inspections are conducted on buyers’ behalf during the purchase process, but pre listing inspections for sellers also can be beneficial. Pre listing inspections can identify areas of concern to be addressed before the sale and can assist in disclosure matters. The American Society of Home Inspectors recommends that a home be inspected every 10 years, regardless of whether a sale is taking place.
  6. Home inspectors are too nitpicky and will identify every little problem in the home. A professional home inspection is an objective examination of the condition of the visible and accessible components of a home on the day of the inspection. Professional home inspectors don’t point out every small problem or defect in a home. Minor or cosmetic flaws, for example, should be apparent without the aid of a professional.
  7. All home inspector certification and credentialing programs are equal. Some organizations for inspectors offer credentials in return for nothing more than an annual payment, while others are new or exist mainly online. Some require 250 inspections before a member can advertise their membership. When selecting a home inspector, look at the background, history, and reputation of the person’s certifying organization as well as the experience of the inspector.

2. Have a Radon Test Conducted and Obtain the Results

We covered radon earlier in the process here. What you need to remember from that is that you need to have a radon test.

Your agent should be able to quickly provide a list of qualified, experienced radon testing companies (and, if they can’t, seek better representation!).

The good news: if a radon problem is found, it is not expensive to fix (usually no more than $1,000), and sellers almost always agree to pay for this (because they know they’ll have to fix the problem one way or another, even if you decide not to buy the home).

It’s also important to note that radon test typically take a minimum of 48 hours to complete, so be sure to schedule yours quickly enough to ensure you don’t run out of time in terms of the amount of time you have to complete your inspections.

3. Complete All Other Due Diligence Items

If your offer is like most, you’ll also have provisions for other “due diligence” items, like reviewing easements and restrictions, or reviewing condo or homeowners association documents. Exactly as with your home inspection and radon test, your offer will allow you a certain amount of time in which to complete those tasks.

Your offer should also require the seller and or listing agent to provide those items within a certain period of time. Unfortunately, we’ve had plenty of experience where the seller and or listing agent did not provide those items in a timely fashion. Your agent should be on top of this, and she be following up with the listing agent aggressively and consistently until the items are obtained.

In any event, obtain and review those items and be sure to notify the listing agent if you have any issues with whatever you discover. Examples of things that sometimes affect transactions are:

  • An undisclosed easement on the property
  • An undisclosed restriction on the property
  • A homeowners association provision you don’t like (e.g., you can’t store boats and you own a boat)
  • A condo association provision you don’t like (e.g., you can’t have pets over 30 pounds, and you have a 40 pound dog)

4. Obtain Your Formal Loan Approval

Assuming you are obtaining a mortgage (and if you are not, just skip this point), your lender will not be able to provide your formal loan approval until you provide the details of the home you are purchasing.

At that point, they will order an appraisal. Assuming the home appraises successfully, that should provide them with the last remaining details they need to be able to provide your formal loan approval.

Be sure to follow up with your lender to ensure they have everything they need from you, so that they may complete the loan approval process in the most efficient manner possible. This is also the right time to start checking off the items on your Pre-Closing Checklist.

5. Schedule Your Closing

Once your loan has been formally approved, your agent will communicate that to the listing agent, and the conversation about when the closing will take place will occur. Note that most title companies will not schedule a closing until your loan has been approved.

6. Schedule Your Move

Once you’ve scheduled your closing, you should be in position to locate a move and formally schedule your move

7. Obtain and Review Your Closing Documents

After you’ve picked the date for your closing, and typically a couple of days before your closing, the title company should complete the first draft of your closing documents. If you are being represented by a quality agent, they will be diligently following up with the title company and obtaining those documents ASAP.

Once obtained, your agent and or your attorney should review the closing documents to ensure everything is in order. Our unfortunate experience is that almost every set of closing documents includes errors (most are not significant, but just know this can be an issue). So, it is important to complete your review as quickly as possible to ensure there are no last minute surprises at your closing!

8. Arrange Your Funds for Closing

You should be in close contact with your lender after your formal loan approval, specifically to obtain the information you need regarding what funds you need to bring to closing.

Note that some title companies are now requiring that funds may only be delivered via wire transfer (as opposed to bringing a certified check, which was the norm in the past). As wire transfers sometimes take a full business day to complete, it’s important to find out as early as possible exactly what you need to bring to closing, and exactly how you must deliver it.

9. Attend the Closing

If you’ve done everything on this list, then this should be a fun, pleasant, smooth and easy event. If you haven’t (or if the listing agent has not done a good job preparing the seller), then closings can be an adventure.

Hopefully, this will be a moot point and your closing will be a wonderful experience for all involved!

10. Move In

Congratulations! You made it! Now it’s time to move in and enjoy your new home!

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