Escrow to Closing

Buying a new home is a serious matter. It can be an absolute pleasure or a massive headache. You need an experienced and dedicated professional who will be with you every step of the way. Your home is not just a home, it is a major investment in your future. We’re glad you’re visiting our site. Every word you read here, is not just some real estate rhetoric, but a genuine commitment to you … our client.

escrow to closing

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.

During this period of purchasing your home, you are going to need an escrow or settlement company to act as an independent third party so that you know when and who to give your money to get the deed to your new home. The escrow or settlement company will hold your deposit and coordinate much of the activity that goes on during the escrow period. This deposit check may also be held by an attorney or in the broker’s trust account. Make sure that there are sufficient funds in your account to cover this check.

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.

The period that you are “in escrow” is often 30 days, but may be longer or shorter. During this time, 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 should include the following:

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. Caveat; even in brand new or newly remodeled homes, the inspector is likely to find several things “wrong” with the home. The key is to not allow any decisions to be driven by emotion, but rather methodically go over the report with your real estate agent and decide on what are actual problems and what aren’t. At that point, your agent will negotiate a mutually positive solution with the seller.

FINANCING CONTINGENCY: 

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.

APPRAISAL CONTINGENCY: 

Real estate has a large emotional component to it and oftentimes, a buyer will get so emotionally attached to a particular property that in order to secure it, the buyer will agree to purchase terms that may be above and beyond the actual value of the home. It’s always a good idea to have an appraisal contingency which basis the validity of the contract on a professional appraisal of the home. If the appraisal comes back higher, you’re likely getting a great deal. If it comes back lower, you can negotiate a new sales price with the seller or decide to come out of pocket for the difference. If a mutually beneficial deal can’t be reached, you are in cleared to have the contract null and void and get your deposit back. This contingency is especially important if you’re buying “All Cash”.

THE SELLER MUST PROVIDE A CLEAR AND REMARKABLE TITLE:

Your agent, along with an attorney or title officer, will help you review the title report. The title must be “clear” to ensure that you do not have legal issues regarding your ownership.

SECURE HOMEOWENER’S INSURANCE:

This will very likely be required before you can close the sale. If you’re doing an all-cash deal, you want to get this done as soon as possible to have your major asset properly protected. We can offer great, local insurance agents.

CONTACT LOCAL UTILITIES:

Prior to closing, contact local utility companies to schedule to have service turned on the day of closing.

FINAL WALK-THROUGH:

Schedule the final walk-through inspection for the morning of the closing. At this time, you should make sure that the property is exactly as the contract says it should be. Check all the appliances, make sure all the faucets run, make sure you have cold and hot water everywhere. Take a general look around and especially pay attention to the “permanently attached” items that you were sure would come with the property might have been either removed or replaced by the seller at the last minute. Your agent can methodically walk you through items to see and check.
Congratulations on your purchase. Here at Allure Real Estate, we don’t just help clients buy new homes, we help them bring their dreams to a reality. Glad to have you with us on your journey.

~ THE ALLURE TEAM