You have found the home of your dreams, congrats! Let’s get the contract written up and explain what happens after the contract is signed by both parties:
The Purchase Contract
A ratified (signed) contract is a legal arrangement between a potential purchaser and the property’s seller.
Some important tips to keep in mind to streamline the process:
- We will assist you in drafting all the paperwork for your purchase and make sure that you have copies of everything.
- Stick to the schedule. Now that you have chosen your offer, you and the seller will be given a timeline to mark every stage in the process of closing the real estate contract. Meeting the requirements on time ensures a smoother flow of negotiations so that each party involved is not in breach of their agreements. During the process we will keep you constantly updated, so you will always be prepared for the next step.
The Closing Agent
In Maryland, you the buyer get to choose the settlement company who will be the closing agent. The settlement company will hold your earnest money deposit in escrow and will research the complete recorded history of the property to ensure that the title is free and clear of encumbrances by the date of closing and that all new encumbrances are properly added to the title. Some properties are subject to restrictions which limit various activities such as building or parking restrictions. There may be recorded easements and encroachments, which limit the rights to use your property.
How to Hold Title
You may wish to consult an attorney or tax advisor on the best way to hold title. Different methods of holding title have different legal, estate and tax implications, especially when selling or upon death of the title holder.
Inspections
If you have written an offer with a home inspection contingency, you will need to have a licensed property inspector inspect the property within the time frame that was agreed upon in the contract. Not all inspectors are created equal! We have a list of inspectors whom we have worked with for years, we are happy to refer them to you.
Appraisal and Lending
It is imperative that you keep in close communication with your lender, who will let you know when additional documents are needed to approve your loan application and fund your loan. If the agreement is conditional upon financing, then the property will be appraised by a licensed appraiser to determine the value for the lending institution, via a third party. This is done so that the lending institution can confirm their investment in your property is accurate. Appraisers are specialists in determining the value of properties, based on a combination of square footage measurements, building costs, recent sales of comparable properties, etc. When you are within two weeks of closing, double check with your lender to be sure the loan will go through smoothly and on time.
Homeowner Association/Condo Association Document Review
In Maryland, the seller has to provide the buyer with what is called a “Resale Package”. In essence, this is all the HOA or condo documents containing the rules of the association, the financials of the association, a resale certificate which says the home has no violations against it, and more. If it is an HOA, you will have 5 days to review the package. 7 days if it’s a condo association.
Homeowner’s Insurance
If you are obtaining a loan, you will be required by your lender to purchase a certain amount of insurance on the property. The value will depend on the lending institution and the purchase price of the property. You may be able to save hundreds of dollars a year on homeowners insurance by shopping around for insurance.
We will be happy to recommend experienced knowledgeable insurance agents for every property type.