6 Things to Know About the Escrow Process When Buying a Home
You've finally found the house of your dreams: a beautiful open kitchen with plenty of seating for the family to gather around the bar. The sunlight shines through the main room, capturing the perfect golden light in the evenings. And the backyard is ideal for the dog and kids to run around and get some energy out. The good news is that the seller accepted your offer! So does that mean you can send out your address to everyone and schedule deliveries? Not so fast.
The home is not yours until you've reached the end of the escrow period. What is escrow? The escrow process starts when the seller accepts your offer, and it is not over until you have the keys in your hand to your new house. So what happens in between? And what are the chances the sale will fall through? Well, it's pretty common. Read on to know what to expect.
6 Things to Be Prepared for While Your Home Is in Escrow
The Appraisal: The lender financing your home will want a full appraisal of the structure and property to ensure it is good for the loan amount. If the appraisal comes in less than the selling price, the seller may ask you to pay cash on top of your approved loan amount. Or the seller will need to come down to the appraisal price if they don't want to put the house on the market again. The appraisal is always another chance to negotiate the home's selling price.
The Inspection: You always want to get a home inspection before buying a house. The inspector will look at the roof, foundation, and overall condition of the home and make notes on anything that may need immediate repairs. You can use the inspection to negotiate items that the seller may fix. For example, the seller may replace the roof on their dime before you move in if it is not in good shape.
Financing: The funding process can take a large part of the escrow period. Each paycheck and income has to be checked and rechecked. All current debts are considered, including car loans and student debt. The lender's due diligence ensures you can repay the loan as agreed upon.
Seller Disclosures: The buyer looks over the seller's disclosures to make sure there are no red flags that they are investing in a money pit. For example, the seller's disclosures may include flood damage multiple times throughout the years. Do you want to buy a home that is vulnerable to flooding?
Secure Homeowner's Insurance: Take the time during the escrow period to get home insurance. Moving in is a lengthy process, and sometimes things can go wrong. The last thing you would want is a burst pipe when you're about to move in that you don't have home insurance to cover.
Final Walkthrough: You get one last chance to look at the house and make sure it is in the condition you agreed upon. If the seller agreed to make any repairs, you can check them out and see if they were done correctly. Then, approve the house before signing the final papers and closing escrow.
Something could go wrong at any step in the process that allows the buyer or seller to get out of the contract. Or the loan could fall through, leading to a canceled agreement. The escrow process is in place to protect both the buyer and the seller. It's always important to know what you're getting into when making such a significant investment.
For more tips, check out these related blog posts:
Check the Condition of These 5 Things Before Buying a Home
7 Red Flags that Indicate a Bad Real Estate Investment
Questions about real estate?
Do you have questions about your region's real estate market or market changes? We are standing by to help and answer any questions that you have. If you are unsure if it is the right time to sell or buy, you can seek help from experts who know the market. Our advisors will advise you on the right move for your family’s situation. If you are on a time crunch, you can seek counsel on how to best navigate the sale of your home during a buyer’s or seller’s market.
At Blondin Real Estate, we are always here to help; contact us!