Anatomy of A Sale

THE ANATOMY OF A HOME SALE

 What happens when you buy or sell your home

You’ve decided to buy or sell your home.  You’ve hired an honest and talented real estate agent who skillfully negotiated a great deal.  That agent now presents you with an ocean full of documents for you to sign.  

The documents include the purchase agreement and a ton of disclosures.  Make sure your agent explains in detail every document.  The purchase agreement, which is the contract, includes the purchase price, the terms of the transaction, and the responsibilities of the buyers and sellers.  The agreement explains who pays for what, what companies will be used for escrow, title, natural hazards disclosures, and the home warranty, and specifies what contingencies are involved.  

The most common contingencies state that the buyer can back out of the deal if the loan is not approved, if the appraised value is not equal to the purchase price, or if there are conditions regarding the home or neighborhood that the purchaser, during the allotted time, finds unacceptable.

Other documents include agency disclosures which outline the responsibilities, rights, and obligations of the involved agents and brokers.  There are disclosures about the property itself, about market conditions, and advisories about what you should know about the neighborhood, the condition of the home, and about your rights and obligations as a buyer or seller of the property.  Take your time and actually read this stuff.  

Your agent will then open escrow, the process in which a neutral third party ensures that all contractual obligations are fulfilled, that all documents are complete and properly signed, that all deposits have been made, that all checks are properly disbursed, and that everyone does what they are supposed to do.  Most escrows take between 30 to 45 days to complete.  Cash offers can usually have their escrow completed within 15 days.

During escrow you will get a title report which will state if clear title can be delivered to the buyers at the close of escrow.  If not, the report will state what must be done so that it can be.

You will also receive a natural hazards disclosure report which outlines the natural hazards, such as floods, earthquakes, floods, and mudslides, that are associated with the property.  

During escrow the buyer will have the home inspected by a professional.  That inspection often results in a request for repairs by the buyers.  That request will then be negotiated.  There will also be a termite inspection.

The lender will have an appraisal done of the property.  The purpose of the appraisal is to ensure that the property is worth the amount of the loan that has been requested.  If it isn’t, then new negotiations will result.  A low appraisal can result in the deal falling apart  if the parties cannot negotiate a resolution.

Throughout escrow, the parties will be presented additional waves of documents.  Actually read those documents as well before you sign them.

If everything is okay, the buyer will sign off on the contingencies, the loan gets funded, title transfer is recorded, and you have just bought or sold you