You may be inundated with all kinds of information offered by phone calls, letter, and other mailings. All this stuff can be a bit overwhelming for the executor, the administrator, or the trustee of a loved one’s home. To get ahead a little bit of some of the terms during the purchase or sale, here are some common terms.
I believe having the facts helps to make good decisions, so whenever I meet with a potential seller, I bring along an estimated seller proceeds document. It has all the closing costs listed out, so there aren’t any questions, and it makes it easy for you, as the seller, to understand what the closing costs are going to be. Some of the closing costs are, of course, commissions. That’s how I get paid, and the buyer’s agent gets paid. That’s how we pay our bills and feed our families. Also, there will be title and escrow fees. There will be termite repair fees. You’ll have some taxes that might be due. If you have a mortgage, that will be listed on the estimated seller proceeds document, also. So that way when you read over that estimated closing cost with me, you’ll understand exactly what is going to be paid through the escrow process.
Escrow and Title
Escrow and title collect all the information from both sides of the seller and the buyer. As a third party, they’re neutral. They put lots of things together to make things go smoothly. They’ll also be checking if there is a mortgage on the property. They’ll be getting the information on that, so when it’s time to pay if off, they’ll have all that information ready to go. In regard to title, I always make sure way ahead of putting the house on the market that we get a preliminary title report. This shows all the liens and debts on the property as well as easements.
Quick story about Tom, executor of his father’s estate… or so we thought. When I pulled the preliminary title report through the title company, it came to light that Tom’s mother passed away prior to his father, and she was still on title. Nothing had ever happened to put the title into his father’s name only. That meant we had to go through the probate courts to get his mother’s information because we needed to have her name on all the documentation as we worked through selling the house in probate. It was a little more work, but we avoided a huge delay by getting his mother’s information up front before we put the house on the market.
Once the buyer is under contract, once we’ve negotiated that contract, then the buyer will have a specific amount of the time to do inspections. Inspections usually start with a general inspection report. Then if something is found that there are concerns about, the buyer has the right to bring in other more specific inspectors such as a plumber or an electrician, or a roofer.
The inspections are part of the purchase agreement and one of the contingencies of the sale. Two other contingencies that are almost always included with a purchase agreement are the appraisal and the buyer’s full loan contingency.
The appraisal is perhaps the most important contingency. I always do my best to show up at the property during the appraisal so I can point out specific features. I want to make sure the appraiser notices some of the amenities that the home has that could add value to the home. In this way I can do my due diligence to make sure that the appraised value figured by the appraiser comes in near or at the purchase price you and I have established.
I have been very successful with this approach and managed to avoid unwanted surprises that come with a lower than expected appraisal.
Typically, when I’m working with my clients, I help negotiate a timeline that gets put into the purchase agreement. This is usually 10 days for the inspection, 14 days for the appraisal, and 17 days for all contingencies to be satisfied. Of course, this also includes the buyer’s loan contingency. Once we contract with the buyer, those timelines are going to be set in stone.
My team and I carefully monitor those timelines to make sure that we stay in line with what was contracted. And we will be sure to have your buyer remove those contingencies in writing as we move through the escrow process.