The Initial Agreement and Deposit
An effective agreement is a legal arrangement between a potential purchaser and the property’s seller. Here are some important tips to keep in mind to streamline the process:
- Keep written records of everything. For the sake of clarity, it will be extremely useful to transcribe all verbal agreements including counter-offers and addenda and to convert them into written agreements to be signed by both parties. I will assist you all the paperwork for your purchase and make sure that you have copies of everything.
- Stick to the schedule. Now that your offer has been chosen, you and the seller will establish a timeline for every stage of the process of closing the real estate contract. Meeting these requirements on time ensures a smoother flow of negotiations so that each party involved is not in breach of their agreements. During the process we will keep you constantly updated, so you will always be prepared for the next step.
Contract Contingencies
Home Inspection Contingency
The home inspection process helps to protect you against structural or material problems that are not detectable in a casual walkthrough of the property. A licensed home inspector will do a thorough visual inspection of the interior and accessible portions of the exterior of the home. You will need to have an inspector examine the property within the time-frame agreed upon in the contract. The buyer is responsible for hiring and paying for the inspection.
You may elect to have different inspectors inspect the property, if you wish to obtain professional opinions from inspectors who specialize in a specific area (i.e. roof, HVAC, structure). However, keep in mind that the home inspector may not be able to visualize or test all potential issues in the home but will do as complete a job as possible. If you are not currently working with an inspector, we can recommend several reputable options.
Depending on the items uncovered at the home inspection, you have the right to ask for a repair of the damaged, inoperable or non-acceptable areas of the home OR a credit to complete the repair yourself or with reputable companies that you know or have worked with before.
Attorney Approval
In Illinois, both parties in the transaction are represented by an attorney. The attorney approval period is where your counsel can review the contract and suggest modifications. These changes are in an attempt to protect you from any undue obligations. Your attorney will also add language or create an addendum for agreed to terms not a part of the customary contract. They will also review condo documents, financials, order title, and much more! A real estate attorney’s review is always highly recommended. During attorney review, if the contract is not acceptable to either party, both have the option to cancel under specific terms. If the contract is acceptable, then the transaction moves forward towards closing.
Association Approval – If the property that you are purchasing is conditional upon an association approval, request the rules, regulations, and other important documents from the seller as soon as you have an effective agreement to purchase. Make sure that the application documents and processing fees are submitted to the appropriate person at the association by the required time. Fill out all of the information completely and legibly so there is no delay in processing the application. If you are required to meet with the association for your approval, make an appointment as soon as possible for a potential interview. Most associations require a certificate of approval before move-in.
Mortgage Contingency
A mortgage contingency states that you will buy the home subject to obtaining a mortgage. If you cannot obtain a mortgage, and the seller will not agree to move forward with the sale, the contract will then be void.
Appraisal and Lending – It is imperative that you keep in close communication with your lender, who will let you know when additional documents are needed to approve your loan application and fund your loan. If the agreement is conditional upon financing, then the property will be appraised by a licensed appraiser to determine the value for the lending institution, via a third party. Appraisers are specialists in determining the value of properties, based on a combination of square footage measurements, building costs, recent sales of comparable properties, operating income, etc. This is done so that the lending institution can confirm their investment in your property is accurate.
Double-check with your lender to be sure the loan will go through smoothly, on time and there is no additional paperwork to be addressed. The lender should then provide you with the “Clear to Close.”
Property Insurance – If you are obtaining a loan, you will be required by your lender to purchase a certain amount of insurance on the property. The value will depend on the lending institution and the purchase price of the property.
We will be happy to recommend experienced knowledgeable insurance agents for every property type.
