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Escrow Inspections and Appraisals – What to Expect

Selling a home is complicated. Escrow, inspections, and appraisals – here’s what to expect:

Escrow Inspections and Appraisals

Inspections and Appraisals
Most buyers will have the property inspected by a licensed property inspector. This should occur within the time frame agreed upon in the contract to purchase. Some buyers will have several different inspectors inspect the property. They will obtain professional opinions from inspectors who specialize in a specific area (eg. roof, HVAC, structure). If the agreement is conditional upon financing, then the property will be appraised by a licensed appraiser. This happens so that the lending institution can confirm their investment in your property is accurate. A commercial property buyer may also have a complete environmental audit performed and/or soil test.

Escrow.
Escrow is an independent, neutral third party. They hold the buyer’s earnest money deposit until the contract terms are met, and recording takes place.

Contingencies.
A contingency is a condition that must be met before a contract becomes legally binding. For instance, a buyer will usually include a contingency stating that their agreement is binding only when there is a satisfactory home inspection report from a qualified inspector.

Before completing their purchase of your property, the buyer goes over every aspect of the property, as provided for by purchase agreements and any applicable addendums. These include:

  • Obtaining financing and insurance
  • Reviewing all pertinent documents, such as preliminary title reports and disclosure documents
  • Inspecting the property. The buyer has the right to determine the condition of your property by subjecting it to a wide range of inspections, such as roof, termite/pest, chimney/fireplace, property boundary survey, well, septic, pool/spa, arborist, mold, lead-based paint, HVAC, etc.

Depending on the outcome of these inspections, one of two things may happen:

1. Either each milestone is successful, and the contingencies removed. This brings you one step closer to the closing.

or

2. After reviewing the property inspection and disclosures, the buyer requests a renegotiation of the terms of the contract (usually the price).

How do you respond objectively and fairly to the buyer when a renegotiation is demanded while acting in your best interests? This is when a professional listing agent can make a real difference in the transaction’s outcome. The Harb & Co. Team is uniquely qualified to troubleshoot the most difficult of negotiations, having dealt with thousands of property sales in the past.

Loan Approval and Appraisal.
We suggest you accept buyers who have a lender’s pre-approval, approval letter, or written loan commitment; this is a better guarantee of loan approval than a pre-qualification. Expect an appraiser to review your property and verify that the sales price is appropriate.