There are four terms and processes that most transactions include in some way, shape, or form.
Inspection
Even in a multiple offer situation or when purchasing a new home, I recommend an inspection. Every home has issues that come up (yes, even new ones). An inspection allows you to be in the driver’s seat so you can learn as much as you can about the property and what you would like to do about its flaws. Some issues are a big deal that need to be addressed right away, but others may be things you can live with and fix as you go.
Make sure your general inspection covers: Exterior, porch, deck, foundations, walls, chimney, roof, windows, doors, attic, electrical components, plumbing, heating and air conditioning, basement, crawl space, and garage. Note, if the inspector notes particular challenges such as structural issue, roof issues, pests, electrical issues, etc, it may behoove you to bring in additional inspectors and specialists.
You are responsible for the cost of the inspection and I can provide you with some names of inspectors who have historically done a good job for my clients, but you may also want to get referrals from friends and family.
Appraisal
The appraisal is ordered by the bank to verify the property is worth the price the buyer is paying for it to protect their interest. The appraiser will look at comparable properties that have recently sold and will tour the property. Ideally, we would want to learn that the appraisal came in at the agreed-on price or higher. In some cases, however, it comes in lower. In that case, the seller and listing agent may work to justify the price that is being offered, but if that doesn’t work, then we will renegotiate with the seller to determine how to make up the difference or work on a new price so the bank is satisfied with the buyer’s equity position.
Title
The Title to a property refers to all the legalities that are associated with a property including legal description, ownership, rights, responsibilities, and rules. Easements, CC&Rs, property ownership, liens, and more are all recorded as part of the property’s title. When title is opened on a property, these pieces of a property’s history are brought out in the open and examined to make sure first the seller has the right to sell the property (that they are the free and clear owner), but then the buyer needs to understand the rights and limitations of their new property ownership.
Escrow
Escrow is the term for the process that the contract, property, and parties are in between the contract and close. Think of escrow as a central station which needs to receive documents, communication, and the money associated with the transaction. The escrow team will be responsible for overseeing the signing of all final documents, making sure all monies are distributed properly, and that the deed is recorded correctly.
