Frequently Asked Questions
The Closing Process for Buyers
The sellers have accepted our offer on their home. What's next?
Congratulations! You're on your way to homeownership. It is a lengthy process, but we're here to help you out. The first step will be to choose whether or not you will have a professional inspection on the home. We highly recommend taking advantage of this first step. (Keep reading to find our why!)
Do we have to have an inspection? What does it entail?
The inspection will help you understand the ins and outs of the home that you may not have discovered upon your initial showing. There could be mold in the attic, flooding in the crawlspace, or pest infestations. Of course, these are extreme examples, but you don't want to close on the home, only to find that the sellers have left you with expensive repairs. The inspection protects you, and gives you the chance to legally walk away from the contract if the home does not meet your standards. A professional inspector will take 2-4 hours to thoroughly examine the home. He should enter the attic and crawlspace, climb on the roof (weather permitting), and scrutinize both interior and exterior features. It is important to chose a quality inspector with a great deal of experience, so you can rest easy during the process. We can help you find that inspector.
Who should I chose to inspect the home? Does the inspector have to be licensed or qualified?
Technically, anyone can complete the inspection. You may even complete your own inspection. However, unless you are a general contractor, or experienced in home-building or home inspections, we highly recommend that you hire a professional. We have a list of preferred inspectors here at The Anderson Group, as will most real estate agents. Ask your agent for help with choosing an inspector if you aren't confident in making the decision yourself.
How much does an inspection cost, and is it worth it?
The cost depends on the professional, and most of the time, the buyer pays for it. Inspections range in price based on the size of the home, but most start around $300. If the home you are purchasing is very large, the price may be closer to $500. Larger homes (4500+ square feet), sometimes run at a higher cost because they take longer to complete, and the inspector has more to examine. In our opinion, the inspection cost is absolutely worth it. Think of an inspection like an insurance policy. You pay an upfront cost to discover any safety or material hazards in the home. If you skip out on the inspection, you may later discover issues that could costs hundreds or even thousands of dollars to repair.
Can I attend the inspection? Am I required to be there?
Yes, you can attend. The inspector will generally ask that you show up about one to two hours after the inspection time begins. This gives the inspector a chance to climb up on the roof and squeeze through tight spaces without you having to follow. Once you arrive, the inspector will go through his report with you and show you any and all areas of concern. This process may take up to an hour. This time will also allow you to ask the inspector any questions you may have. You are not required to be present for the inspection. If you hire a professional with a great deal of experience, they will give you a very detailed report. This report is designed to provide you with all of the information you need without having to be present. The inspector will also provide contact information so that you may reach out with any questions.
How long does it take to get the inspection report back?
Once the inspection is complete, the inspector will provide you and your agent with a report within 1-2 business days. We will keep this timeline in mind as we are scheduling your inspection as to not miss your contingency deadline.
We received the results from the inspection. What is the next step?
The inspector will provide you with a thorough report of the home. At this point, you have three options. The first option is to accept the home as-is. If you find that the inspection report came back with minor items, you may choose to accept the home in it's current state and move forward with the rest of the home-buying process. The second option is to ask the sellers to make some repairs before you close on the home. From here, the seller has the option to agree to make all of the repairs, agree to make some of the repairs, or refuse to make any repairs. If you cannot come to terms with the seller during the inspection period, you do have the option to walk away within the designated timeline. Your third option is to terminate the contract without requesting any repairs. Some buyers find that the home they are in the process of buying has too many issues to take care of, and no longer want to move forward with the transaction.
What kind of repairs should I be requesting from the inspection?
You may not want or need to ask for any repairs. Inspection reports will list many items, most of which will be minor. Typically buyers ask for safety concerns or items that will devalue the home. The inspection negotiation is to make sure you are comfortable moving forward with the transaction. If an item is of concern, we want to address it before moving forward.
How long do I have to decide what repairs I am going to request from the seller?
This answer can be found in your original Purchase and Sale Agreement. The typical deadline is 5-10 business days after the date that the contract is accepted. This deadline is important to remember. If you have not requested any repairs from the seller before your deadline, they are not obligated to make any repairs, and you lose the chance to terminate the contract legally. If you still choose to terminate the contract, your earnest money will not be refunded.
What is an appraisal?
Once buyer and seller have agreed on inspection items, the lender will move forward and order the appraisal. The appraisal is required by all lenders. The appraiser's responsibility is to ensure the value of the home meets or exceeds the purchase price that you have agreed to pay. The appraisal process also depends on the type of financing that you have chosen. FHA, VA, and RD loans will require a more extensive process, where the appraiser will be looking for major safety hazards such as peeling paint, exposed wiring, broken windows, and missing handrails. For a standard conventional loan, the appraiser will not be checking for the same hazards listed above, but will simply be checking for value.
Why do I need an appraisal?
Anytime you are purchasing a home with the help of a lender, an appraisal will be required. The lender needs to be assured that the home you are purchasing is a sound investment, which the appraisal will determine.
Can I choose who the appraiser is?
No. Not even the lender can choose the appraiser. When a lender orders an appraisal, the home is put into a pool of other homes in need of an appraisal. Appraisers have access to this pool, and pick which orders they will complete. This keeps the appraisal process fair, because a neutral third party completes the appraisal. The appraiser is not affected if the sale does or does not close, and the lender cannot influence the appraiser one way or another because they cannot communicate with one another.
What if the home does not appraise at value?
Unfortunately, sometimes the home does not appraise for the purchase price that has been agreed upon between buyer and seller. If this is the case, there are a few options for you as a buyer. The seller may have their agent pull valid comparable properties that have recently sold to send to the appraiser. These comparable properties must meet certain requirements, and even these may not convince the appraiser that the purchase price is sound. If the seller has pulled valid comparable properties, and the appraisal report value does not change, the seller may consider lowering the purchase price to meet the report value. As the buyer, you may also make up the difference between the purchase price and appraisal price with cash funds. If you do not wish to move forward with the sale after the appraisal does not come in at value, you may void the contract and your earnest money may be refunded. Your agent can best direct you on how to handle this situation.
Where do I get homeowner's insurance?
You can choose any company that provides homeowner's insurance. We recommend checking with the company that currently holds your car insurance, because many companies provide a bundling discount. However, do not settle on the first company that gives you a quote. It is highly recommended to shop around for pricing before deciding. Try talking to 3-4 insurance companies to ensure you are getting the best deal.
Is the seller required to clean the home before we close?
We would hope the seller would clean the home before you move in as a courtesy; however, if it is not negotiated into the contract, the seller is not obligated to clean the home when they move out. If cleanliness is a concern, be sure to notify your agent, and ask them to place that term in the initial offer.
When should I transfer utilities into my name?
We recommend that you make the call to transfer utilities into your name a week before closing. The utility companies will ask you when you are closing on the home, so that all payments are prorated based on that date to the appropriate parties. If, for any reason, your closing date is moved, be sure to inform the utility companies immediately so that you are not charged for days when the seller still owns the home.
Who is the down payment check made payable to, and does it need to be a cashier's check?
The down payment check will need to be made payable to the title company. You can find out which title company by checking the Purchase and Sale Agreement or by asking your agent. The title company handles ALL funds for closing on homes, including the lender's funds. Check with your title company to ensure you have a valid form of payment. Most title companies will not accept cash or a personal check. A cashier's check is a valid form of funds in our local area, but if you live outside of Southeast Idaho, we encourage you to call your title company to find out what an acceptable form of payment is.
When can we move in?
You can move into the home when the sale is official. This means that the transaction has been funded and recorded. "Funded" means that the lender has sent the total amount needed to close on the home to the title company, and they have received them in their system. This process typically takes under 24 hours. Some lenders can even fund within 2-3 hours of signing. If you are paying for the home in full without assistance from a lender, "funded" means that you have brought the proper amount in valid funds to cover the cost of the home. Once the title company has everything they need in order to transfer the title to the new buyer, they will send all of the needed documentation to the County, who will then publicly record the title. This is when the sale has "recorded". The county then sends notification to the title company, and you are now an official homeowner! Once you receive notification of the funding and recording process, you may now start moving your belongings into your new home.
What do I need to do if I'm using a Power of Attorney?
A Power of Attorney can be used to appoint another person to sign paperwork on your behalf. If you are planning on having another person sign for you, there are a few steps you need to complete. First, if you are using a lender to purchase a home, you will need to ensure that they will allow for someone else to sign on your behalf. Next, make sure your Power of Attorney is valid. The best way to guarantee that nothing falls through the cracks is to contact a local title company or attorney. They will have the proper paperwork, as well as the ability to notarize, and can ensure all steps are completed with accuracy. There may be a fee associated with the process. Check with your attorney or title officer beforehand if this is a concern.