We have a lovely couple of clients who wanted to know how the closing process works by the numbers, so I thought I would renew that information within our Housing Radio real estate show, by current real estate standards and practice. (with over 10k real estate articles – we have written about this many times before)
When buying a home, there is a process in place during escrow, here are some points of interest that I’d like to share concerning the process which occurs after your offer is accepted and after escrow opens.
Remember this, your lender may be asking for documents you have already surrendered. They are not playing a game, they need the same information, even if it has not changed. The reason they are asking again is they need a new “date stamp” on the documents. This is because the real estate lender is asking for it. (not the loan officer or originator – that’s the person you hired to get you the loan – the real estate lender is the source).
If you are not in escrow yet with an accepted offer – read our article about offers which have been submitted.
This is being asked by the actual source of the money. Some lenders are “direct lenders”, in that case they are those asking for it again. Some lenders are Mortgage Brokers and have hundreds of sources of money, all with varying requirements related to verification and paperwork.
There are also many different parties within each loan – for example the underwriting process could be three levels thick with three different parties look over the paperwork submitted and having the ability to request more.
Once you are notified that you have a fully executed offer (including counter offers if any), you are the buyer of record and the seller and you are exclusively in escrow.
Unless your agent has a fully executed contract, anything can happen.
Even if the agent tells your agent the property is yours, it does not matter. Your agent needs to get that fully executed contract in hand, then it becomes legally binding. New Agents make the mistake of taking another agent’s word for it and this gets them into trouble with their buyers, fyi.
Another part of escrow, which escrow will advise you of is obtaining home insurance. Depending on the type of loan you have, the payments for the home insurance are going to be made within your monthly payment or separately. However, you have the choice of whom you use for your insurance. Rely on your broker if you don’t have a source for insurance, I’m sure they, as we do, have many resources for that!
Within a normal, non modified by counter offer or by original offering, contract – in California. For residential real estate, a home buyer has 17 days in which to complete all inspections and investigations and 21 days to obtain a loan approval.
After this point the seller will request the home buyer remove all contingencies in writing. If you cancel after this step, your deposit can become the property of the seller.
It’s after this time frame the buyer should be satisfied as to any concerns they have with the property, hiring all necessary inspectors, as they see fit, reviewing seller disclosures, all disclosures and obtained information about the property. Including HOA documents, if home is located within an HOA community. Buyers should consult any and all appropriate professionals and entities to satisfy any and all concerns.
Executed Contract – your agent will send your lender a copy of the executed contract
Appraisal – your lender will order the appraisal of the home you are buying. This typically happens within the first few days and is hands off by your agent and you. (You are paying for this upfront in most cases and it’s non refundable if the property does not appraise) est $500+
Home Inspection – this is part of the process where you agent may have some recommendations. This is where a licensed individual goes with you and your agent to the property you are purchasing and look it over in a complete fashion. (You are paying for this at the time of inspection, it’s non refundable if the property has issues you choose to cancel the transaction over) est $400+
Termite Inspection – this used to be a seller cost. The contract has changed and this fee is now connected to the home buyer. (You are paying for this at the time of inspection, typically on the same day as the home inspection and this is also non refundable if termites are found and if the seller does not agree to remedy, or if you wish not to proceed) est $90ish
Seller and Other Disclosures – These documents are not guarantees nor are they warranties. They are the seller’s best knowledge of the property you are purchasing. Other standard disclosures are also going to need to be reviewed by you.
After these inspections are conducted, you will be provided with written reports showing conditions of the real estate you are buying. It’s at this time you will want to start considering preparing a request for repairs or choosing not to.
In some cases asking the seller to repair/remedy items discovered is the best course of action. However, in most cases asking for a credit does a better job of protecting the home seller and buyer from future issues because the seller offer’s the credit “In lieu of Repairs”.
Escrow Signing – You will be getting paperwork via email or regular mail from the escrow company who has been hired by the home seller. We tell our clients to never sign anything from escrow without our knowledge first! Even if you are being pressured and if the form seems “simple” enough, Don’t do it! Gather all information and let us know it arrived. We will then schedule an appointment for you to meet with our own personal escrow officer to go over all paperwork.
Escrow will continue and your lender is going to continue to ask for paperwork you are positive you have already surrendered. In some cases, the lender may ask for a document at 5pm on a Friday night that you cannot access until Monday Morning at 0900am. Where that document will take a week to obtain from the source – STRESS is common.
While there are standard items which are requested by lenders within a real estate transaction, there are many parts to their process. It’s difficult to quantify what in total will be asked for. Best suggestion is to remain patient and just do your best.
Something else which may not have occurred to you. The act of buying the home is the only dealing you are having regarding the purchase of residential real estate. And I get it, it is quite stressful in most cases.
The lender is dealing with more than your loan at the same time, this is not an excuse and no one should “over book”, or take on more business than can be handled in such a way where all their clients are kept happy. Unfortunately, this is not the way most see it in real estate, be prepared.
Listen to the real estate radio show to continue through the escrow process. I’m Connor with HONOR and I’m glad to be of great service to you and yours regarding all of your real estate needs. BE safe and reach out to me when you are ready to get busy with achieving your real estate goals.
This escrow timeframe article is “typical” and to be considered ordinary. There are many different scenarios and things change and most transactions are not the same. Just know that we will be there for you.