In our Home Buying series, we have looked at the process from the beginning. In part 1, we showed you how a good real estate agent is invaluable to the home buying process. In part 2, we looked at making offers on homes you like and how to negotiate the price. In this edition, we’ll be looking at setting up escrow and dealing with home inspections. As a part of the closing phases in the home buying process, you’ll learn how to successfully close a deal and know what to expect once you buy a home in the Ann Arbor area.
Step Seven: Escrow
Once the buyer and seller have signed the purchase contract, counter-offers, and addendum, it is time to “open escrow.” The title company that will handle the escrow account should be noted in the contract. That company will provide a receipt for earnest money received. It will also do a title search to establish that the seller can legally sell the particular real estate involved.
The title company will also get payoff information on any existing liens. Calculations will be made on prorated taxes, association fees, interest, and insurance policies.
After all instructions from both the seller and the buyer have been complied with, the company will prepare a closing statement. It will complete any and all legal documents required to legally convey the property to the buyer. Escrow “closes” when the county recorder provides notification that the deed has been been changed to reflect the name of the new owner of the property.
Step Eight: Home Inspections
A set period of time time is established after the purchase contract has been agreed upon and signed for the buyer to conduct a professional home inspection. A buyer should almost always exercise their right to conduct a thorough inspection. If the buyer chooses to forego the inspection, the Ann Arbor property is purchased “as is,” and any pre-existing problems that become apparent after the sale become the buyers problem.
Per the contract, the seller provides the buyer with 1) A Clue Report, and 2) the Sellers Property Disclosure Statement. The latter states what the seller knows about the property and any defects that it may have. This disclosure statement helps the home inspector to get started with his/her inspection.
Professional inspections often last about 2-5 hours. The buyer should always try to be present for at least the first half-hour or so. This gives the inspector an opportunity to personally explain what is found. Not every issue is a major one. In general, the inspector can educate the buyer about the property, citing future maintenance needs, etc. Since the inspection is being paid for anyhow, it is incumbent upon the buyer to get the most value out of the inspection that is possible.
An inspector wants to avoid liability issues himself, so he’ll typically note every little issue that is discovered. A discussion at the end of the inspection, in person or by phone, will allow the inspector to further explain his/her findings.
There are an exhaustive number of hidden defects that a home inspector looks for. Sometimes the unexpected does occur. Perhaps a basement foundation problem is noted. In many cases, the seller will end up paying for the repair to keep the sale moving forward.
It is vital for the buyer to complete any inspections by the final day of the “inspection period.” A form, the Buyer’s Inspection Notice and Seller’s Response (BINSR), attesting to the satisfactory completion of the inspection, is signed by the buyer and delivered to the seller’s agent by the deadline. If it is late, the buyer’s right to request that repairs be made by the seller is lost. At that point, you basically can take the property “as is,” or risk losing the earnest money. The BINSR is strictly used for inspection issues. It cannot be used as a tool to change anything else in the original signed contract.
Once the inspection is completed and any inspection issues are resolved, the sale of the property can conclude per step seven noted above.
Buying a Home in Ann Arbor, MI
Now that you have read and learned about the home buying process in Ann Arbor, it’s time to find a home! If you still have questions about the buying process, contact us or start exploring our available home listings: