Inspections & Appraisals

The Process

Initial Agreement and Deposit

An executed purchase agreement is a legal arrangement between the buyer and the seller that sets the terms of the transaction. To protect all parties and keep the process on track:

• Maintain written records of everything, including verbal agreements, counter-offers, and addendums. We can assist in drafting and distributing all written documentation.
• Respect the agreed-upon timeline. Both parties will work within a defined schedule to complete each stage of the closing process.

The Closing Agent

Once both parties have signed the purchase agreement, a title company or attorney will serve as the escrow or closing agent, and you will deposit your earnest funds. The escrow agent is a neutral third party responsible for holding, receiving, and distributing all funds associated with the transaction through to the closing date. They will research the full history of the property to confirm the title is clear of encumbrances and that any new encumbrances are recorded correctly. All contingencies outlined in the Purchase Agreement must be satisfied before escrow can close and ownership can transfer.

How To Hold Title

There are several legally recognized ways to hold title, or ownership, of a property. Each method carries different implications for ownership transfer, financing, collateralization, and taxation. We recommend consulting with a qualified attorney or tax advisor before deciding which structure is right for your situation. We are happy to connect you with trusted professionals in these fields.

Inspections

As part of the contingencies in your Purchase Agreement, you will schedule a licensed inspector to evaluate the property within the agreed-upon timeframe. Inspectors will assess the overall condition of the property and identify any issues that may require attention. Depending on the property, you may also choose to engage specialists, such as roofing or plumbing inspectors, for a more detailed review of specific systems. For commercial properties, a lending institution may require an environmental audit or soil test as part of their approval process.

If inspections reveal concerns not addressed in the Purchase Agreement, you may request a renegotiation of terms, typically the purchase price. Once you are satisfied with the inspection results and the agreed-upon terms, the contingencies will be formally removed.

Appraisals And Lending

Maintain regular contact with your lender throughout the process to ensure you are notified promptly when new documents are needed. If the Purchase Agreement is contingent upon financing, the lender will require an independent appraisal of the property by a licensed third-party appraiser. The appraiser will evaluate the property's value based on a range of factors, including building costs, square footage, operating income, and comparable sales in the area. Confirm with your lender approximately two weeks before closing that the loan approval is on track and on schedule.

Association Approval

Some properties require approval from a homeowners or community association prior to closing. If this applies to your purchase, request all relevant rules, regulations, and required documents from the seller as early as possible. The Purchase Agreement will establish a timeline for submitting paperwork and completing any appointments required by the association. Once approved, your closing agent will request the original approval letter to be recorded with the deed in the county record books at closing.

Property Insurance

Standard property insurance protects against losses from fire, theft, and certain weather events such as wind or hail. While most states do not mandate coverage for property owners, most mortgage lenders will require it as a condition of the loan. Depending on how you intend to use the property, you will need either homeowners insurance if you plan to occupy the home, or landlord insurance if you plan to lease it as an investment property.