If you finally found the home of your dreams at a price you can afford then congratulations!! It is an exciting time for you and your family. Even though the seller has accepted your offer remember nothing is final until you go to the closing table and get a deed from the seller and make your final payment to the seller. And just like the seller, you need to jump through a few “hoops” before you can make the journey to the closing table.
Pre-approval- Before you even start looking at homes contact your lender and get a pre-approval letter. It is our recommendation to use a local lender. Our experience is that the use of internet lenders or out of state lenders can cause huge problems when it comes time to close.
Disclosures- The seller should supply you with disclosures that are required by law. They should be complete and an honest representation as to the condition of the sellers property. If you don’t get a disclosure from the seller you can demand on at any time. See chapter 558.A of the Iowa code.
Loan application- Unless you are paying cash after you have a signed agreement with a seller immediately contact your lender and make an appointment to make a loan application. After you have made loan application do not make any major purchases (i.e. a car, wedding ring, etc.) and do nothing to jeopardize your credit score.
Appraisal- Unless you are paying cash for your new house your lender will require that you pay for a certified appraisal to determine that the value is in line with the purchase price. If the appraisal is in excess of the purchase price great!! But if it’s less, then you will need to make a decision as to how you want to proceed. You will probably want to negotiate with the seller. Maybe not; but if so (and you want to move forward with the purchase) you should be prepared to pay the difference between the purchase price and the appraised value.
Inspections- Order your inspections early. We always recommend that the buyer make their offers subject to inspections – whichever ones they feel are necessary. The decision is up to you. Most common are home inspection, Radon inspection, Pest inspection, and maybe a water quality (if on a well) and septic (if served by a septic system). By the way, in Iowa septic inspections are mandatory when certain properties are sold. I have yet to see a home inspection (even on new houses) that did not point out some defect or “condition” of the property. As a buyer you need to realize that pre occupied homes are not going to be perfect. What you should be looking for are big ticket items or items of safety. And remember a home inspection is just the inspectors “opinion”. They, like the rest of us, are not infallible. If you think a defect needs to be corrected you can require the seller to do that in order for you to proceed with the purchase. If they won’t, and will not negotiate with you, it will be your option to void the purchase contract.
Subject to sale- So you have found the prefect house but you can’t buy it without first selling your present house!! Remember you are in a competitive environment. You may be competing with other buyers who don’t have a house to sell and therefore their offer will look better than yours If you can entice the seller to accept your offer “subject to the sale” of your home most likely they will want to have the right to continue to show their home to other buyers and if they come up with another offer they will want the right to give you notice and then you will have a minimal time (usually a few days) to try to come up with the funds to proceed without having to sell your home. This can be a very involved process and you must exercise extreme caution. You need to make up your mind early in the game that if this happens, that’s just the way it is and then deal with it. You might lose a home or two if you need to make your offer subject to the sale of your house.
Your attorney’s opinion- Once all the contingencies on your purchase contract have been removed your attorney will “read” the abstract for you. He/she will issue a written opinion as to the quality of the title to the property you are buying. Noted on the opinion will be any liens, encumbrances, etc. that are a cloud on the title. You should read the opinion yourself and if you don’t understand anything ask. Any title objections should be cleared up prior to going to closing.
Deed- When you close you will receive a deed from the seller. This is the document that will pass title from the seller to you. The deed must be recorded at the county recorder’s office.
Final walk through- You should do a final walk through of the property just prior to closing. You will want to check the following at a minimum: 1. Is the property in reasonable condition? 2. If the seller agreed to make repairs etc. have they been made? 3. Has all personal property that was not to be left as part of the sale been removed? If he answer to any of these is “no” then contact the seller immediately and inquire as to why.
So there you have it. A synopsis of what is involved in buying and selling a home. For us, taking our buyers to view properties is the easy part. Actually anyone can do that. The critical part of real estate transactions is from the point where an offer is drawn up to the point the buyer & seller walk away from the closing table – both happy.
In this process listen to the advice you will receive from your real estate professional, your lender, your lawyer, and anyone else who might be involved in the process. Even though you hire all of these people to represent your best interests be proactive in the process. It will make for a much smoother transaction from beginning to end.
Are you planning to sell your home in order to purchase your new home. Then read our blog on closing on a home in Dubuque, a seller’s perspective.
If your are planning to buy or sell a home, or both, and looking for help, then contact American Realty of Dubuque. We’ll put you in touch with an experienced Realtor to help you with the process.