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THE PURCHASE PROCESS

The two main ways we see purchases facilitated is either with financing or with cash. The process can look very different, so we've described both.

 

Reminder: The very first thing that a buyer needs to obtain is a Pre-approval Letter from a lender, or a Proof of Funds letter from their financial institution. This must happen before we can see any properties!

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FINANCED PURCHASE

FINANCED PURCHASE

FINANCED PURCHASE

In our area, purchasing a home with financing usually takes between 45 and 60 days after the property itself has been found. After the initial showing, a buyer makes an offer, negotiates with the seller, and an accepted purchase agreement (APA) is obtained when both parties agree to all terms. From there, we have a number of moving parts to keep track of:

  1. Earnest Money Deposit Collection: The first thing that needs to happen after an APA is the collection of the earnest money deposit. This is consideration put up by the buyer that communicates to the seller that they are serious about the purchase, and are guaranteeing they will not change their position in the contract for any non-contractual reason. You get to decide the amount of money you offer for this (customarily a minimum of $500, and up to 1-2% of purchase price) and as long as the contract is executed correctly, this amount will go on your bottom line at closing.

  2. Inspection contingency: It is customary for a contract to have an inspection opportunity period of 10 business days, or about two weeks, from the date of acceptance. During this time, the buyer is welcome to conduct any inspections on the property that they require to ensure they understand what kind of condition of the property is in before they purchase it. The purchase is considered "contingent" on a "satisfactory home inspection." Sometimes renegotiation will take place based on inspection results, if issues are identified that were not clear to the buyer at the showing. An inspection is optional for every buyer, but is highly recommended for obvious reasons.

  3. Title work: Title work is ordered early in the deal, and its purpose is to ensure a clear chain of title of ownership to the property is available, and no liens or encumbrances are attached to the property that would render it untransferable. If problems arise, we should be notified early enough to address them, or to rescind the offer to purchase while retaining that earnest money deposit should the title search reveal problems that cannot be resolved by closing. 

  4. Appraisal: The appraisal is required by a lender, and usually takes place after the inspection contingency is lifted. We write all of our contracts with a contingency that the appraisal must come back "at, or above the purchase price" to protect our buyer clients from overpaying for a home, or being required to pay out of pocket for the difference in the purchase price and the appraised value. A lender won't lend over appraised price. 

  5. Underwriting: The last step for a financed purchase is for all of the information to be submitted to the underwriter at your financial institution who examines the whole package and ensures that loaning this money to you is a good investment for your lender to make. Sometimes they require additional documentation from you, the buyer. As soon as they have confirmed that everything is in order with your purchase, they give the "clear to close" and we get to schedule closing!

  6. Closing Day! All of the above takes about 45-60 days to complete, and once we have clear to close from our lender we get to schedule closing. This usually takes place at the title company or at your lender's office. They review loan documents with you and get your signature on a number of other documents which transfer title into your name. You'll need to bring your check for your downpayment and closing costs, and your identification. Block off up to an hour for this if you like to hear the details, but most closings can be completed within a half-hour to 45 minutes. Then you get the keys and its on to the fun world of moving!

Quick Read

EMD: Client's Job

After accepted offer, drop a certified check for $1,000+ to RE/MAX 1st Realty.

INSPECTION: Client's Job

Get home inspected within two weeks of accepted offer. 

TITLE WORK: Agent's Job

Ensures clear ownership is being conveyed, takes a couple of weeks to complete.

APPRAISAL: Lender's Job

Ensures the bank is making a good investment in lending you the money, takes 2-4 weeks.

UNDERWRITING: Lender's Job

Review of total purchase package and final lender approval.

CLOSING DAY: Group Effort

Closing is facilitated by title co, bring any money needed to close in a certified check and your ID!

Financed Purchase
Cash Purchase

A cash purchase is usually quite a bit more straight-forward and efficient. Because of that, it is also favored by sellers. Cash purchasers who are not obtaining an appraisal can expect to close in three-to-four weeks, and an additional week or two can be added for those who want an appraisal. 

  1. Earnest Money Deposit Collection: known as the EMD, collecting this dollar amount is the first thing that happens after an accepted offer. This is consideration put up by the buyer that communicates to the seller that they are serious about the purchase, and are guaranteeing they will not change their position in the contract for any non-contractual reason. You get to decide the amount of money you offer for this (customarily a minimum of $500, and up to 1-2% of purchase price) and as long as the purchase is executed contractually, this amount will go on your bottom line at closing.

  2. Inspection Contingency: It is customary for a contract to have an inspection opportunity period of 10 business days, or about two weeks, from the date of acceptance. During this time, the buyer is welcome to conduct any inspections on the property that they require to ensure they understand what kind of condition of the property is in before they purchase it. The purchase is considered "contingent" on a "satisfactory home inspection." Sometimes renegotiation will take place based on inspection results, if issues are identified that were not clear to the buyer at the showing. An inspection is optional for every buyer, but is highly recommended for obvious reasons.

  3. Title work: Is essential to ensuring the property you're buying can be correctly conveyed. It's ordered early in the process, and its purpose is to ensure a clear chain of title of ownership to the property is available, and no liens or encumbrances are attached to the property that would render it untransferable. If problems arise, we should be notified early enough to address them, or to rescind the offer to purchase while retaining that earnest money deposit should the title search reveal problems that cannot be resolved by closing. 

  4. Appraisal: This is completely and totally optional for a cash purchase. Most often, we see buyers skip this because it costs between $500-1,000, and your agents can run a market analysis to ensure you're purchasing wisely. Of course, those more pragmatic-minded are welcome to obtain an appraisal if they so choose!

  5. Closing Day! After the title work is in, we can schedule closing. This will take place at the title company's office and they will facilitate the paperwork. You will need to bring any cash to close for the purchase in the form of a certified check (wire transfer is also an option, beware of fraud here!) and your ID. Closing will be efficient because you won't have a million loan pages to review! Keys are usually provided at this time (unless otherwise negotiated).

CASH PURCHASE

Quick Read:

EMD: Client's Job

After accepted offer, drop a certified check for $1,000+ to RE/MAX 1st Realty.

INSPECTION: Client's Job

Get home inspected within two weeks of accepted offer. 

TITLE WORK: Agent's Job

Ensures clear ownership is being conveyed, takes a couple of weeks to complete.

APPRAISAL: Lender's Job

Ensures the bank is making a good investment in lending you the money, takes 2-4 weeks.

CLOSING DAY: Group Effort

Closing is facilitated by title co, bring any money needed to close in a certified check and your ID!

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