An Accepted Offer and Due Diligence
The Final Step in How to Buy a House.
Congratulations, you are on your way to owning your very own home! Follow these suggestions (and your Realtors's advice) so that escrow and settlement with go as smooth as possible.
You will be asked for a down payment on the home you are purchasing. You can choose to put down as much or as little as you want (depending on your mortgage), but remember, the more you put down toward the total price of your home, the less time it will take you to pay off and the less your mortgage payments will be every month.
In California, the contract states that the buy is to give an "eanest money deposit" which is often called a "good faith deposit" this is agreed upon on the contract the amount. Generally it's 1-3% of the purchase price, this is negotiatable between the buyer and seller. Once you have an accepted offer and recieve comfirmation that the seller accepted your final offer then an escrow company will reach out to you with introducing themselves and give instructions on how to safely deposit your money within the first 72 hours.
The deposit check will be cashed. Assuming the sale goes through, this money will be applied to the purchase price of the home. If for any reason the sale is not consummated, you may be entitled to receive all of your deposit back, less standard cancellation fees. In certain instances, the seller may be able to retain this money as liquidated damages. Prior to executing a purchase contract, it would be wise to speak with your counsel regarding whether or not it is your best interest to have a liquidated damages clause as part of the contract.
How to do your due diligence during "escrow period?"
1. When are you supposed to have completed your due diligence? It all starts with choice of the buyer to hire aprofessional home inspector. Their job is to inspect all the main aspects of the property and to give you an independant assesment of anything potential future repairs, maintenence issue or unknow deferred maintainence that the seller may not even know about. We highly recommend getting a home inspector and would be happy to share an example of what they cover for your review. Next up is the sellers disclosures in which the seller are to share everything that they know has happened to the property while they owned it. If the owner passed away and it was passed onto the executer and they didn't live in the home you may get an adendum letting you know they don't have to disclose anything. Each item specified in the contract must be completed satisfactorily. By the time you have opened escrow, you have come to an agreement with the seller on the closing date and the contingencies. Each contract is different, but most include the following: 1. Inspection contingency: this should be completed as soon as possible after the contract to purchase is signed as unsatisfactory results of the inspection may mean that you will want to cancel the contract.
2.Understand what and when financing contingency means: Once the contract is signed, you have a period of time to secure funding. If, for any reason, you are unable to secure funding during the period of time granted to you by the contract (and the seller will not provide a written extension of time), you must decide whether you want to remove the contingency and take your chances on getting a loan. You may choose to cancel the purchase contract.
3. Did you know that a the seller must provide marketable title? With an attorney or title officer, review the title report. The title must be "clear" to ensure that you do not have legal issues regarding your ownership. Check into local and state ordinances regarding property transfer and make sure that you and/or the seller have complied with them.
4. Have you found a homeowner's insurance agent? This will probably be required before you can close the sale. Due to such requirements as special fire and earthquake insurance, obtaining this insurance may require a lengthy period of time. It would be in your best interest to apply for insurance as soon as possible after the contract is signed.
5. We can share with you the contact #s for all local utility companies to schedule to have service turned on when you close escrow.
6.The last step before you move in is the final walk-through inspection. At this time, you should make sure that the property is exactly as the contract says it should be. What you thought to be a "permanently attached" chandelier that would come with the property might have been removed by the seller and replaced with a different fixture entirely. The final walk through is when you go through the list of "request for repairs" that where agreed upon between the buyer and the seller.
7. Are there any fixes or changes to the property you want to make before you move in? It's so valuable to have a contractor or handyman do work before you move into your place. There is nothing better than moving into to all the changes you would want to have completed.
You've made it! Once the sale has closed, you're the proud owner of a new home. Congratulations!