Inspections & Appraisals

Understanding the Process

Initial Agreement and Deposit

Once an offer is accepted, an effective purchase agreement becomes a legally binding arrangement between you and the seller. To keep the process moving smoothly, keep these principles in mind:

• Maintain written records of all communications, including verbal agreements, counter-offers, and any addendums. Our team can assist in drafting and distributing these documents to all parties.
• Respect the agreed-upon timeline. Both you and the seller will be held to a schedule that governs each stage of the closing process.

The Closing Agent

After both parties have signed the contract, a title company or licensed attorney will serve as the escrow or closing agent. Your deposit will be placed in escrow, a neutral third-party arrangement designed to hold and distribute all transaction funds until the closing date. The escrow agent will research the complete history of the property to confirm the title is free of encumbrances and that any new encumbrances are recorded correctly. All contingencies in the Purchase Agreement must be satisfied before escrow can close and ownership can transfer.

How to Hold Title

There are several methods for holding title to a property, each with distinct implications for ownership transfer, financing, collateralization, and taxation. We strongly recommend consulting with a qualified attorney or tax advisor to determine the best approach for your specific situation. We are glad to connect you with trusted legal and financial professionals in our network.

Property Inspections

As part of the contingencies in your Purchase Agreement, you will schedule a licensed property inspector to assess the home within the agreed-upon timeframe. Inspectors evaluate the overall condition of the property and flag any concerns you should know about. For more specialized assessments, you may wish to bring in additional inspectors with expertise in specific areas such as roofing, plumbing, or electrical systems. For commercial properties, an environmental audit or soil test may be required by the lending institution. If inspections reveal issues not reflected in the purchase agreement, you have the right to request a renegotiation of the terms, including the purchase price.

Appraisals and Lending

Stay in regular contact with your lender throughout the process so you can respond quickly when additional documentation is needed. If your Purchase Agreement is contingent upon financing, the lender will require an independent appraisal by a licensed third-party appraiser. The appraiser will evaluate the property based on building costs, square footage, income potential, comparable sales, and other relevant factors to confirm the investment value. Plan to follow up with your lender at least two weeks before closing to verify that the loan will be approved on schedule.

Association Approval

Certain properties require approval from a homeowners or building association before the purchase can be finalized. If this applies to your property, request all relevant rules, regulations, and required documentation from the seller as early as possible. The Purchase Agreement will outline the timeline for submitting paperwork and completing any required appointments. Once approval is granted, your closing agent will obtain the original approval letter so it can be recorded with the deed in the county record books at closing.

Property Insurance

A standard property insurance policy protects your investment against damages from fire, theft, and certain weather events. While not all states legally require property insurance, most mortgage lenders do. Depending on how you intend to use the property, you will need to secure either homeowners insurance if you plan to occupy the home or landlord insurance if you intend to rent it out as part of your investment strategy.