In this process of buying a home, you’ve done quite a lot. You’ve chosen your realtor, explored a property of choice and have gotten your offer accepted. Now, you’re getting into (what I call) the “meat and ‘taters” of the deal.
These are the details that require (arguably) the most attention. Because they’ll help you in hammering out the final deal. These include escrow, home inspection and appraisal. And I’ll explain them in detail in this article, so you’re armed with the best information when you buy your dream home!
What’s an Escrow?
The first part of getting through escrow, home inspection and appraisal is holding your money in an escrow account. These accounts are made to protect your money so that it may go right to the seller.
When you buy a home, your purchase agreement usually includes a good faith/earnest money deposit. This tells the seller that you are genuinely interested in buying the property. The good faith amount will sit in the escrow account till the transaction ends.
Another type of escrow account that I’d like to talk about is an escrow holdback account. The money here is held past the completion of the property’s sale. These are used in special cases, like when some bills are due, or when the seller gets to stay in the property for an extra month.
Understanding Inspection
The next step in escrow, home inspection and appraisal is the inspection. Once the seller accepts your offer, you’ll need a licensed property inspector to inspect the property. This will start and be completed within the timeframe decided between you and the seller.
I believe that this is one of the most crucial aspects of the entire buying process. You need to be fully aware of the property’s existing condition. You may have different inspectors inspect the property too.
Furthermore, you can also have specialized inspectors look at specific areas of the house, like HVAC, water, the overall structure and such. If you’re buying a commercial property, you’ll need to get an environmental audit done for the lending institution on the site.
Depending on the inspections’ outcomes, two things can happen:
- Each milestone closes successfully and the contingencies are slowly removed. This brings you closer to the final deal.
- The buyer, after reviewing both the papers and the property, requests for a renegotiation of the terms.
Knowing What Appraisal Means
This is the last step of the escrow, home inspection and appraisal process. You’ll have to be in touch with your lending institution. This is because they will ask you for additional documents to approve and fund your loan.
This is where the “appraisal” comes in, as an experienced third-party appraiser will evaluate the property’s value. The appraisers are specialists in calculating the property’s value, basing it on aspects like measurements, operating income, building costs and more.
People ask me pretty often about why this is needed, so here’s the answer. Your lending institution needs to confirm that your investment in the property is accurate.
When you’re two weeks away from finalizing, check back with your lender to see if the deal will sail smoothly and timely.
Summing Up Escrow, Home Inspection and Appraisal
These steps, when combined, are vital in finalizing the deal to acquire your dream home. You’ll need an escrow account to ensure that your payment reaches the seller. The home inspection will clear up any doubts that you may have. And finally, the appraiser will calculate the property’s value using their specialized criteria.
For help in buying a home in the Woodinville WA area? Give Butler & Butler Real Estate a call.
Contact Butler & Butler for all your Woodingville, Washington real estate needs or keep reading from 10 part series below.
- Financially preparing to buy a home including your credit score & a down payment.
- Choosing the right mortgage and getting pre-approved
- Needs vs Wants When Buying A Home
- Location, Location, Location – How to Decide Where to Buy a Home
- Finding the right real estate agent for you
- Red flags and things to know before you look at homes
- Viewing homes, open houses & home tours
- Making an offer, negotiations & and if someone else ofer gets accepted
- Escrow, home inspection & appraisal
- Closing & getting your keys