| The buyer(s)
with the assistance of their transaction broker make a written offer for
a specific property for a price with contingencies for mortgage,
inspection, acceptance of covenants and restrictions, title and survey
or ILR (Improvement Location Report – certified document sufficient for
the title company to insure) with specified dates for closing and
funding.
 Some customers ask why
they can’t go ahead and investigate the contingencies before making an
offer. If there is not agreement on price, investigating contingencies
can take valuable time and will be a fruitless exercise. The
contingencies allow the buyer a means of canceling the contract (and
obtaining a refund of the earnest money deposit) if it is for a
reasonable concern that cannot be cured by the seller.
The Buyer provides a
sufficient earnest money check (deposited by the title company when all
parties have agreed) that is copied and attached to the purchase
agreement/offer. The offer can be revoked by the Buyer at anytime prior
to the Seller acting upon it.
The offer provides two or three days
for the Seller to respond through their representative to me. I
communicate with you and provide their Counteroffer by email/FAX. The
Seller’s counter offer is based upon the original agreement with such
changes as it contains and becomes the offer to the Buyer.
At any time the document can be signed
by the other party completing the agreement. A full price offer without
any unique contingencies must be accepted by the Seller unless a higher
offer has preceded it.
The purchase agreement has specific
deadlines for all of the contingencies and who is responsible for paying
each expense. Customarily, the Buyer pays for the inspections and any costs of
obtaining financing and mortgage title insurance. The Seller pays for
the survey/ILR for the title company, the title policy to insure the
buyer and any other expense agreed in the contract. Each party pays
their own legal or tax counsel expenses and shares the closing costs
equally, each paying their recording fees.
Association dues, property taxes and
any other expenses levied on the property are prorated to the day of closing
with the Seller crediting the buyer for any expenses accrued and not
paid and the Buyer reimbursing the seller for any potion of expenses
paid for the future.
Buyer(s) are recommended to do their
due diligence in every area including but not limited to: lead based
paint, inspection, water, septic, well, mold and mildew, radon and any other
considerations the buyer may have concerns. These should be specified in
the purchase agreement with deadlines within which to accomplish the
buyer’s satisfaction with adequate time for curing the objections prior
to closing.
Escrow and title
Title exceptions 1-4 are usually requested by the Buyer to be removed
from the title insurance policy to strengthen it. As closing approaches,
I obtain a preliminary settlement statement (HUD) that shows the
expenses allocated to both the buyer and seller and the buyer’s funding
requirement. We each review the statement for satisfaction.
Please
email me for a simple diagram and summary of the above process. I
furnish my buyers with timelines to enable the closing process to be
simplified and deadlines met. |
