Escrow Inspections and Appraisals

Inspections and Appraisals

Most buyers will have the property inspected by a licensed property inspector within the time frame that was agreed upon in the effective contract to purchase. Some buyers will have several different inspectors inspect the property, if they wish to obtain professional opinions from inspectors who specialize in a specific area (eg. roof, HVAC, structure). 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 third party. This is done so that the lending institution can confirm their investment in your property is accurate. A buyer of a commercial property may also have a complete environmental audit performed and/or soil test, if required by the lending institution.

The Closing Agent.

An attorney who specializes in real estate law will be selected as the closing agent. His job is to examine and insure clear title to real estate. After researching the complete recorded history of your property, he will certify that 1) your title is free and clear of encumbrances (eg. mortgages, leases, or restrictions, liens) by the date of closing; and 2) all new encumbrances are duly included in the title.

Due Diligence.

The Due Diligence Period is the time period following contract when the buyer has the opportunity to do his due diligence to learn about the property and confirm that he will complete the purchase. In exchange for the Due Diligence time period, the buyer pays a Due Diligence fee directly to the seller.

Before completing his or her purchase of your property, the buyer goes over every aspect of the property, as provided for by purchase agreements and any applicable addendums. These include:

  • Obtaining financing and insurance;
  • Reviewing all pertinent documents, such as preliminary title reports and disclosure documents; and
  • Inspecting the property. The buyer has the right to determine the condition of your property by subjecting it to a wide range of inspections, such as roof, termite/pest, chimney/fireplace, property boundary survey, well, septic, pool/spa, arborist, mold, lead based paint, HVAC, etc.

Depending on the outcome of these inspections, one of two things may happen:

1. Either each milestone is successfully completed, bringing you one step closer to the closing; or

2. The buyer, after reviewing the property and the papers, requests repairs to the property or a renegotiation of the terms of contract (usually the price).

How do you respond objectively and fairly to the buyer when repairs or a renegotiation is requested, while acting in your best interests? This is when a professional listing agent can make a real difference in the outcome of the transaction. Having dealt with various property sales in the past, Karen offers her expertise and total commitment to every client, no matter what their situation is.

Loan Approval and Appraisal.

We suggest that you accept buyers who have a lender’s pre-approval, approval letter, or written loan commitment, which is a better guarantee of loan approval than a pre-qualification or no documentation from a lending institute. Expect an appraiser from the lender’s company to review your property and verify that the sales price is appropriate.