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Basic steps with the offer process

Submitted by on April 27, 2009 – 3:36 PMNo Comment

Hi V,

This is a brief overview of details with the offer process.

We’ll review the recent sales for the area to determine a reasonable offering price.

I’ll request from your mortgage broker/loan officer a pre-approval letter specific to the subject property indicating that you do qualify for a loan in the amount of your offered price.  This will be submitted with an offer to show the list agent & seller that you are approved for a loan.

We’ll write in contingencies including a pest & contractor’s inspection which are typically done in the first 7-10 days after ratifying an offer.  Once reports are received and reviewed by us they are either accepted as being satisfactory or you may choose to get additional inspections (IE: foundation, electrical) in which case we go back to the seller with a written request to do so.

We use the results of the reports to either renegotiate the purchase price &/or to ask for a seller credit; or the results may be acceptable and no additional negotiations occur with the seller.

In writing, we will remove your specific contingencies.  The exception is an REO (real estate owned/foreclosed upon) property where it’s passive contingency removal which means if the 7th day comes & goes that inspection contingency automatically is removed.  This is where it’s really critical for me to follow our time lines and ask the seller in advance for an extension of time if one is needed.  My mission during the contingency period is to protect your deposit as well as learn as much as possible about the property condition.  That includes going door to door with clients to meet neighbors who can be a great source of information.

The loan contingency is about 14-17 days.  An appraisal is ordered ASAP.  Then we get the appraiser’s report back which goes to the underwriter.
The underwriter reviews loan docs and the appraisal.  If everything looks good, loan docs are ordered for you to sign.  The signed docs then go back to the underwriter for review; then funds are wired into escrow by your lender; then recording & closing of escrow typically happen the following day, this is when you officially own your new property!

Typically, once a seller & buyer have a ratified offer (where both parties have agreed to the price & terms) it takes 30 days to conduct inspections and close escrow.  Once all your contingencies have been removed, if you change your mind about making the purchase you risk losing your initial deposit which is typically 3% of the offered price.

It’s easier to cancel during your inspection period before your inspection contingency is removed; more difficult after the inspection contingency has been removed since then your out would be due to finance terms changing such as a jump in interest rates.  In the offer, I write in the terms/% rate of the loan you’ve applied for.

I’m always really clear in letting clients know at what stage we are at the point of removing the final contingency.

Thanks for visiting my blog.  If you have questions about other details of the purchase process please contact me.  I’m also happy to email you the fantastic Zephyr Buyer’s Guide which goes into more depth about the purchase process.

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