Inspections and Appraisals
Most buyers will have the property inspected by a licensed property inspector within the time frame that was agreed upon in the contract (typically about two weeks). Some buyers will have several different inspectors evaluate the property in order to assess aspects requiring specialized knowledge (for example, roof, HVAC, structural soundness, chimney/fireplace, surveys, septic, wells, pools/spas, mold, etc.).
If the agreement is contingent upon financing, a licensed appraiser will determine the property’s value, essentially protecting the lender from loaning more money than the property is worth. A buyer of a commercial property may also have a complete environmental audit performed and/or soil test.
Your role as a seller during inspections is somewhat limited. Generally, you are simply allowing time for the inspections to occur and making the property available to the buyer’s inspectors and appraiser. If the property is vacant, we recommend leaving all utilities on during inspections as the inspectors will need to examine the water pressure, drains, power outlets, etc.
Depending on the outcome of these inspections, one of three things may happen:
- The contingencies are removed, bringing you one step closer to the closing;
- The buyer, after reviewing the property inspection reports, requests a renegotiation of the terms of the contract (usually the price) or that repairs be made; or
- The buyer decides to terminate the contract. This is rare but most commonly occurs when significant structural or environmental issues are identified.
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 outcome of the transaction. This second round of negotiations is very fact specific and should take into account the market, the sales price of your property, the sales price of comparable properties, the nature of the identified issues, and other considerations. Further negotiations may also arise if the appraisal fails to meet the purchase price. Having handled many property sales in the past, we guarantee our expertise and total commitment to every customer, no matter their situation.
The Closing Agent
Typically a title company or an attorney will be selected as the closing agent. When working for the seller, the closing agent ensures the payment for the home is distributed to the correct places and in the correct amounts, prepares documentation for the seller’s signature, and explains the documents to the seller during closing.
Contingencies
A contingency is a condition that must be met before a contract becomes legally binding. For instance, most residential real estate contracts are contingent upon a satisfactory home inspection. Termite inspections, ability to obtain financing, and appraised value meeting the purchase price are also common contingencies. Only after all of the contingencies are satisfied is the sales agreement fully binding and enforceable.
Contingencies allow the buyer to reach an agreement in principle and then take the steps necessary to evaluate the property and obtain financing for the purchase. Common contingencies include:
- Obtaining financing and insurance;
- Getting an appraisal;
- Reviewing all pertinent documents, such as preliminary title reports and disclosure documents; and
- 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.
Loan Approval and Appraisal.
Cash is king, but most buyers cannot afford to pay cash for a home. When presented with offers utilizing loans, we suggest that you accept buyers who have a lender’s pre-approval, approval letter, or written loan commitment, which is a better guarantee of loan approval than a pre-qualification or no documentation from a lending institute. Expect an appraiser from the lender’s company to review your property and verify that the sales price is appropriate.