Contract Phase

The Contract Phase (Escrow, Option Period, Inspections and Appraisal)

5.1 Execution
Escrow is the process that starts when your purchase offer is accepted by the seller. It ends when you become the new registered owner of the property.

5.2 Title Company
You will need to select a title company, which acts as a neutral third party holding all instruments necessary to the sale, including funds and deed. The title company will research the complete recorded history of the property, to insure 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 from building to parking restrictions. There may be recorded easements and encroachments, where others have limited rights to use your property.

  • Closer receipts contract and earnest money
  • Order title work and tax certificate
  • Abstracter does title search
  • Examiner examines title
  • Issue title commitment
  • Closer reviews title commitment and notifies Realtor of any deffects
  • Title company forwards title commitment to lender, buyer, buyer agent for review and acceptance
  • Title company receives closing instructions from the lender
  • Closer prepares all closing documents
  • Closing
  • Title company faxes signed documents to lender for final approval

5.3 How to Hold Title
You may wish to consult with 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.

5.4 Option Period
Once your offer is accepted by the seller, you enter into a time period known as Option. It is during this time that all inspections and, if necessary, further negotions take place. The option period is made possible by a non-refundable check being given to the seller by the buyer. Amounts typically are around 1% of the entire transaction. The option period gives the buyer the “unrestricted” right to terminate the contract.

5.5 Inspections
Once your offer is accepted by the seller, you’ll need to have professional inspectors evaluate your home’s major systems. Your licensed inspector may recommend other inspections, such as roof, chimney/fireplace, structural, well, septic, pool/spa, arborist or mold.

5.6 Appraisal and Lending
Keep in close communication with your lender, who will let you know when additional documents are needed to approve your loan application and fund your loan. The lender will often send an appraiser out to the property and you may pay a fee for this service either upfront or at closing. Appraisers are specialists in determining the value of properties, based on a combination of square footage measurements, building costs, and recent sales of comparable properties. When you are within two weeks of closing, double check with your lender to be sure the loan will go through smoothly and on time.

  • Verify assets, liabilities, income/job stability and credit history
  • Order, receive and review appraisal
  • Package and submit to underwriter
  • Conditioned by underwriter
  • Collect and package conditions requested by underwriter
  • Package and submit to underwriter
  • Approved
  • Prepare and deliver loan documents/funds
  • Order flood certificate (if necessary)
  • Review final, signed documents sent from title company

For more information and for any additional questions, please feel free to contact us at any time.

Overview | Decide to Buy | Preparation | Choose a Realtor | Property Search | Contract Phase | Closing