Friday, February 24, 2017

Buying a home? What to Expect When You're Closing

On closing day, all parties will sign the papers officially sealing the deal, and ownership of the property will be transferred to you. It's your opportunity to make any last-minute changes to the transaction.

It starts the day before

The day before closing, gather all the paperwork you have received throughout the homebuying process: Loan Estimate, contract, proof of title search and insurance if necessary, flood certification, proof of homeowners insurance and mortgage insurance, home appraisal, inspection reports and Closing Disclosure. You might need to refer to these documents at closing.
Most home-sale contracts entitle you to a walk-through inspection of the property 24 hours before closing. This is to ensure that the seller has vacated the property and left it in the condition specified in the sales contract.
If there are any major problems, you can ask to delay the closing or request that the seller deposit money into an escrow account to cover the necessary repairs.

Your roles on closing day

At closing, your participation will involve a couple of steps:
  • Sign legal documents. This falls into 2 categories: the agreement between you and your lender regarding the terms and conditions of the mortgage and the agreement between you and the seller transferring ownership of the property. Be sure to read all documents carefully before signing them, and do not sign forms with blank lines or spaces.
  • Pay closing costs and escrow items. Borrowers handle the numerous fees associated with obtaining a mortgage and transferring property ownership in 1 of 2 ways: They either roll them into the principal balance of the new loan or agree to pay higher interest rates and have their lenders foot the bill. Some buyers may have to pay these out-of-pocket fees.

Present at closing

Closing procedures vary from state to state and even county to county, but the following parties will generally be present at the closing or settlement meeting:
  • Closing agent, who might work for the lender or the title company.
  • Attorney: The closing agent might be an attorney representing you or the lender. Both sides may have attorneys. It's always a good idea to have an attorney present who represents you and only you.
  • Title company representative, who provides written evidence of the ownership of the property.
  • Home seller.
  • Seller's real estate agent.
  • You, also known as the mortgagor.
  • Lender, also known as the mortgagee.
The closing agent conducts the settlement meeting and makes sure that all documents are signed and recorded and that closing fees and escrow payments are paid and properly distributed.

Thursday, February 23, 2017

Pre-Closing and Closing Checklist for Buyers

There are a number of details that must be addressed between the signing of the final contract and the closing date. They include:

Immediately Upon Acceptance of the Final Contract:

  • Order a home inspection
  • Order a Termite Clearance Letter (although no longer required, still recommended)
  • Determine if you would like a radon inspection and order it from the home inspector
  • Provide your lender with a copy of the contract and discuss locking in your interest rate (Remember: You will usually have five days from the date of the contract to apply for the mortgage loan, which is why it’s important to be pre-approved before you start looking for a home)

During the Home Inspection:

  • Take any measurements for furniture, window treatments, appliances, etc. that you may need
  • Take any photos of the house, if desired
  • Ask the home inspector any questions you may have concerning the home’s condition or construction

One to Two weeks Following the Acceptance Date of the Final Contract:

  • Have your agent create a list of items, noted by the home inspector, that you request the seller to remedy
  • Reserve a moving truck or schedule a moving service
  • Schedule the closing date with the attorney
  • Notify lender to order appraisal

Two Weeks Before Closing Date

  • Contact insurance company to set up homeowner’s policy to be in effect day of closing
  • Call lender and inquire if additional information is needed
  • Get a change of address package from the post office and begin notification process

One Week Before Closing:

  • Make contact with lender to ensure that closing date is on schedule
  • Get directions to closing attorney’s office (Your agent will usually provide this information)
  • Schedule utility transfers
  • Request certified funds for closing (some funds take three days to clear – for stocks, home equity loans, etc.)
  • Order a survey if desired

Three Days Before Closing:

  • Ask closing attorney for a HUD 1 Settlement Agreement
  • Verify that repair items in the inspection amendment have been addressed
  • Consider purchasing title insurance and discuss the benefits with your real estate agent
  • Request all copies of the paperwork from the closing attorney if you plan to read each one in detail, since there will not be time to read over everything at the closing itself

Day Before Closing:

  • Conduct a walk-through to verify the condition of the house is the same as when placed under contract
  • Be sure to double-check that inspection items have been addressed
  • Review updated Termite Clearance Letter
  • Get certified funds for closing
  • Review the HUD 1 Settlement Agreement to verify that the terms of the contract are correct

Day of Closing:

  • Bring photo ID
  • Bring certified funds
  • Bring copy of insurance policy
  • Bring any additional documents requested by the lender

Wednesday, February 22, 2017

Why a Final Pre-Closing Walk-Through Is Important

There is often a misconception and/or confusion of what a final walk through is and why it’s important.  A final walk through can sometimes be referred to as a pre-closing “inspection.”  Since the offer was accepted, over the past couple months there have been many professionals working hard to ensure that the closing takes place in a timely fashion!

Now the bank gives their “clear to close” on your future home.  You get notification from your attorney that the closing day and time is confirmed and scheduled.  The level of excitement is extremely high since there is light at the end of the tunnel!  Your real estate agent should now be in touch regarding the scheduling of your final walk through.  Although exciting, the final walk through is important and many things should checked and inspected and not overlooked.  Here is a detailed explanation of what the final through is and why it’s important.

The Final Walk Through is Not a Home Inspection

In most cases, a buyer has the opportunity to perform a home inspection prior to agreeing to purchase a home.  It is a common contract contingency to be aware of when purchasing a home.  The final walk through is not a home inspection.  This is not an opportunity to thoroughly inspect the electrical panel to check for double tapped wires or that furnace is clean, unless it was agreed upon from the inspection contingency.  The final walk through shouldn’t be an hour or two hour long appointment like a home inspection traditionally is.

Bring a Copy of Your Contract

Your real estate agent should have a copy of your contract with them, but it’s recommended to bring a copy of the contract in case they don’t.  Often the purchase of a home will include “personal property.”  This can include things such as drapes, blinds, appliances, or other items that are not permanently attached to the property.  The final walk through is the time to ensure that the personal property items that were agreed to be included in the sale, are still present.  Have a copy of the contract handy so it can be referred to if there are any questions or discrepancies.

Utility Readings

Prior to a home closing, both the buyer and the seller should call their local utility companies.  This can include the gas, electric, and water providers.  Once a firm closing date and time have been scheduled the seller should contact the utility company to switch the utilities out of their name and the buyer should call to have them switched into their name.  It’s recommended that they are effective the day of closing to ensure there is no stoppage in utilities.  Many providers will charge a fee to turn back on their service.  At the final walk through, readings should be obtained for the utilities.  These readings should be called into the respective companies to ensure accurate billing is provided to both the buyer and the seller.  There are some utility companies who will arrange a time to perform the readings themselves, but it’s always good to be safe and record your own reads!


Possibly the most important part of the final walk through is to complete a checklist of the home.  A good real estate agent should be able to provide their clients a checklist for the final walk through.  Here are several things that should be checked at the final walk through:

Check exterior:  Look at the exterior siding, roofing, chimney, or any other exterior features that the home may have.  If there has been severe weather recently this is extra important as it’s not uncommon for roof shingles or siding to be damaged.

Turn all light fixtures on/off: Check to make sure that all light fixtures are functioning. If one seems to not be working, try replacing the bulb with a different bulb from another light fixture.

Make sure all fixtures are still there:  Ensure that the light fixtures that were in the home when you originally viewed the property are still there, unless it was agreed upon that they would be excluded.

Turn on heat/air conditioning: Depending on the location of the property and the time of the season, turn on the heat and/or air conditioning.  Not having a functioning furnace or air conditioning unit when you move in can create problems.

Turn on water: Check faucets to ensure the water is properly working.  In addition, check for any leaking pipes underneath sinks or leaking bathtubs/showers.  Also make sure that there is hot water because that will generally indicate the hot water heater is functioning correctly.

Flush toilets

Check status of agreed repairs:  If there were items that were agreed upon between the buyer and seller to be repaired or fixed, make sure they have been completed.  A good buyers real estate agent should ask for receipts or records from any repairs that were agreed upon.

Check windows/doors:  Make sure there are no broken windows and/or doors.

Check storage areas to ensure that they are “broom-clean:”  When homes are transferred from a seller to a buyer, they are supposed to be in “Broom-Clean Condition.”  The term “broom-clean” is a very vague, as it can mean one thing to the buyer and a different to the seller.  If there is garbage or personal belongings from the seller in the storage areas or in the home, they should be removed prior to closing.

Address Problems Quickly

If there are problems that arise from the final walk through, it’s important to address them quickly. Real estate agents often will have their client sign a form acknowledging that they are satisfied with the results of the final walk through.  It’s a good idea as it can eliminate problems at the closing.  If there are problems that the buyer wants addressed, their attorney should be notified immediately so they can be resolved prior to the closing date and time if possible!

The above explanation of what a final walk through is and why it’s important is why it should not be taken lightly.  There are many costs associated with buying a home and the last thing that a buyer needs is problems once they’ve moved in due to overlooking something at their final walk through!

Tuesday, February 21, 2017

Pre-Closing Inspection Checklist

This is a guide that is usually a form that helps you in the process of inspecting a home before the closing. It is a form that contains key areas of inspection and may vary according to the home inspector doing the inspection. The key areas that are commonly looked out for in inspection checklist are:

·         Home Exterior -  here, the buyer checks the drainages and their conditions; any problems with the roof, shutters or loose sidings; conditions of the vents, power and AC line connections; any chips or gaps on the walls, drives, or cracks; among others

·         Windows and doors – are all the doors and the windows of the property in good conditions? Doors and windows for the main home, garage, and servant quarters should be well checked.

·         Walls, ceilings and floors – here the nail pops are checked, nicks, missed spots on paintings; gaps in the trim; floors for loose carpeting, gaps or chips in wooden floors, ripples in vinyl covering, cracks, missing ceramics, and so on.

·         Kitchen and baths – condition of the appliances, plumbing fixtures, showers and tubs, colours. Check for any cracks, scratches or scuffs. Cabinets, mirrors, counter tops, etc.

·         Electronics – check for connection using plug-testers in electrical receptacles and outlets to confirm is they are live. Confirm if the electronic items work (TV, DVD, fridge, etc).

·         Basement and attic - any cracks or leaks in the foundation. Stare handrails, installation of attic insulators.

Home Inspections Checklist and what to look for | Magic Minute | Real Estate Tips

Peter Lorimer, CEO of PLG Estates shares the specifics to consider when doing an inspection. He points out that apart from getting a general home inspector during a pre closing inspection, skilled inspectors may be contracted to help is areas general inspectors cannot handle. Some of these areas discussed include. 

Chimney Inspection – 

here, he advises that you get the services of a chimney inspector if the house you are about to buy has a chimney. This is a task that most general home inspectors cannot handle.
Sewer Inspection – this task requires a skilled individual or a company and a general inspector is not one of them. A sewer inspector is contracted to check if the sewerage functions properly without any defects.

Geological Inspection – 

a geologist may be hired to inspect the home especially if it is located up a hill or down a valley to check some of the risks that the home might be exposed to geologically and how they can be fixed.
Survey – if the buyer is not sure of the boundaries of the home, he might call on surveyors to help handle the case since a normal inspector is not able to perform the task. This is important as it helps a buyer know whether he is being duped or being sold an extension of a property that does not belong to the seller.

Real Estate Closings Checklist - Performing A Successful Real Estate Closing As Buyers

Pre closing inspection tips are shared in the YouTube video to prevent closing of the property to fall apart. There are steps discussed in order to make sure that inspection and closing of the property is done the right way for both the parties, that is, the buyer and the seller. From the video, some of the steps include

1.      Earnest money and contingency – earnest money secures interest in the property offered and ensuring the contract has a contingency period which is the time to perform due diligence of the contract. It is usually 7 to 14 days

2.      Funding in place – get the source of funding the property in place. For instance, get a bank approval for the property. Setting some funds aside is important towards sealing the deal.

3.      Title Company – finding a title company for the transactions ahead. Title companies work as middlemen between the two parties. On the same, do title searches to make sure the property is clear and if it is not clear, the buyer should contact appropriate authorities to get advice on whether to proceed with the deal or not.

4.      Real estate attorney – the forth step to get the services of a real estate attorney. This step is optional when dealing with a title company but because of the issues you might not clearly understand; it is advisable to get a reliable attorney.

5.      Negotiate the closing costs – title companies might send the buyer the costs of handling the closing of the property a week before but it is important to review and understand the costs. This will help in negotiating with the company. On the closing costs, listed are the costs that the buyer will incur and the seller too during the inspection and closing.

6.      Home inspection – the next step is to complete the home inspection by the buyer. This is done within the contingency period. When a serious problem is spotted during the inspection, the buyer should raise the issue with concerned parties.

7.      Negotiate the selling price – based on the findings from the inspection, the buyer can negotiate the price of the home or property on the closing table. Re-negotiation should be done if there is a major problem with the property that the seller cannot fix.

8.      Funding escrow – this is done when everything else has been agreed upon. This is where the buyer sends the funds to an escrow account where they will hold the money until all the paper work is done. Alternatively, the buyer can just bring a check on the closing.

9.      Final walkthrough – this is to make sure that the seller has fixed everything that need repair or agreed to fix on a later day and everything in the home is in order as per the contract and inspection done.

1.     Close on the house – this is the final step. After everything is good the buyer can close in the deal on the closing table with the seller.

The above steps are commonly used by buyers who use traditional mode of financing as opposed to cash buyers. It is important not to miss any step as it would result in more problems than the buyer might have anticipated.

Monday, February 20, 2017

Pre Closing Inspection

Pre Closing Inspection provides the buyer with an opportunity of inspecting a home that is up for sale before closing in and owning the home. It is a provision in real estate contracts where the Buyer or his authorized representative is permitted by the Seller to examine both the interiors and exterior of the property at a reasonable time prior to closing.

With recommendations from reliable realtors, the pre closing inspection should be set as closely to the closing date as possible, it is most preferred to have it immediately prior to the closing. This pre closing inspection is normally set up by the seller or the selling agent who has to be present during the walk through. The seller should ideally have already vacated the home before the inspection. Normally, depending on the nature, type and size of the home, this inspection should take around half an hour.

There are a number of considerations that need to be made in setting up a pre-closing inspection. Considerations and thoughts should be made on whether the home is occupied or vacant, whether the seller will move out completely before pre-inspection or closing which very important consideration or whether repairs are required.

Another important overlooked task by the buyer is making arrangements of having the utilities transferred. This task is normally overlooked may be due to the excitement of the buyer in having the property.

Discussed below are YouTube videos on various topics covered under Pre Closing Inspection and related issues.

The Pre-Closing Walk-Through: Buying A New Home In Chicago

This an interview with one of the influential Chicago real estate Attorney Lloyd Gussis who discusses some important issues to consider or do during a pre-closing walk through in buying a home. Some of the areas covered are;

Title Commitment

Gussis points out the importance of title commitment in closing. He says lenders always want a title commitment 2 to 3 weeks before the actual closing. This is because the lender is not going to accept the closing without it.

Home Inspector

The role and the importance of a home inspector are covered. Gussis points out why it is important to bring a home inspector with you on the final day of inspection. This gives the buyer a ‘better trained’ set of eyes of sporting mistakes and issues in both the interior and the exterior of the house that the seller need to fix. The home inspector is able to see the issues you as a buyer cannot see. The inspector should professional and not start advising the seller or the developer on how they should have fixed some areas, done some things or start advising the seller as this will create an antagonism between the seller and the buyer. Therefore, the buyer is advised to get a qualified and competent inspector.

Importance of inspection

Before closing, inspection prior to the closing day is important. The attorney shares the importance of inspection and why as a buyer you should not miss it. An important reason for inspection he says is to inform the seller to fix some of the things that need to be repaired before the actual closing. Failure to point out some of the areas that need fixing to the seller maybe because as a buyer you missed the inspection, means you will incur the cost of fixing those areas after the closing.

Punch list

This is according to the attorney, a list of issues or problems with the property that the seller needs to fix. It consists of all the areas that the home inspector has found and the list should be submitted to the seller prior to closing. He points out that some developers or sellers accept the punch list even 30 days after the actual closing is done while others want the list before closing.

Home Inspection Checklist | Home Inspection Cost | What is a Home Inspection?

A video by Matt Leighton who discusses and explains home inspection checklist and areas related to home inspection.
Leighton kicks off by defining what Home Inspection is and according to him, home inspection is the evaluation of the condition of the home that is done prior to closing.
Before the closing, there is a home inspection contingency where as a buyer you go out and hire a home inspector to have the home inspected. The inspector looks at both the interior and the exterior of the house pointing out key areas that need attention. Once the inspector is done with the evaluation, Leighton points out that, he submits a written report with pictures attached of things that need to be fix and areas that might need repairing in the future. This is normally done on the same day or within 24 hours.
Among the key areas covered, Matt Leighton shares how much it would cost to get the services of a home inspector. He notes that the cost will depend on the nature, size, and type of the home among other factors. He estimates that getting a home inspector would cost between $300 to $500 but sometimes, he notes, it would cost you beyond the given range.

In the video, there are pre closing inspection tips shared and some of them include being there during the inspection, asking questions to the inspector about the inspection and the property, doing your own research prior to the pre closing inspection, not freaking out on the inspection reports and listening to your home inspector. 

What If There Are Problems During The Pre Closing Inspection?

In this case, the buyer should contact their closing representative or a real estate closing attorney as soon as possible to get advice on what to do. The seller should review the problems with the buyer’s closing representatives.

It is so much safer and easier dealing with the pre closing inspection problems as soon as possible instead of waiting to raise them at the closing table while the moving trucks are already set to you in the home.

Thursday, February 9, 2017

What is the sellers disclosure telling you?

Buying a Michigan Home: What Does the Seller's Disclosure Form Tell Me?

If you're buying a home in Michigan, here's what you can discover from the seller's standard disclosure statement.

By Allison Nash

Need Professional Help? Talk to a Real Estate attorney.

After searching for and finally finding your dream house in Michigan, you can breathe a sigh of relief. But watch out for getting overwhelmed by the amount of paperwork that you must review and, most importantly, understand as part of the transaction. While your real estate agent or attorney may help you with this, your home purchase is ultimately your responsibility.

One of the most important documents you must review and understand is the Michigan Seller’s Disclosure Statement. It contains information from the seller about the property’s condition, which will help you make an informed decision about whether to go through with the purchase and what repairs or issues to expect.

What Michigan Sellers Must Disclose on the Disclosure Statement

The seller must disclose certain known conditions about the property in the disclosure statement, and give the form to you prior to signing the purchase agreement. As a practical matter, you will likely receive the form early in the process, perhaps at an open house. Review the form for a complete list of required disclosures, which include such things as:

the condition of appliances such as the oven, dishwasher, refrigerator, ceiling fans, washer, and dryerthe condition of systems such as the plumbing system, HVAC system, electrical system, septic system, and water systemthe condition of structural components such as the roof, basement, and shared walls, andthe existence of flooding issues, environmental problems, encroachment issues, outstanding utility or municipal fees, and any pending litigation concerning the property.

This is why you should not close before you have an inspection done on the home. And not just any inspection. Make sure you have a certified Home inspector from Pre Closing Inspection do your inspection. Don't close without it!

What’s Left Out of Michigan’s Required Disclosures

Significantly, the seller is required to disclose only information about the property that he or she actually and personally knows. The seller is not expected to be an expert in construction, architecture, engineering, or any other specialty and does not have to perform inspections on the property to complete the disclosure statement. In fact, if the seller does not know the condition of a particular property aspect, he or she may indicate “unknown” on the statement.

So, if the seller is aware, for example, that the dishwasher leaks, he or she must indicate such on the statement. If there is a leak in the attic that the seller does not know about, however, the seller is not responsible for disclosing it (even if you think the seller “should have known”).

Unlike some states, Michigan does not specifically require a seller to disclose whether a property is “stigmatized” (by death, murder, infectious disease, and so forth). If that information is important to you, consider performing your own independent investigation of the issue, starting with an online search of the property address.

There are limited circumstances when a seller is not required to provide a disclosure statement at all. Those exceptions include transfers required by court orders, between cotenants, between certain family members, from a divorce or separation, and of certain new property that has not been inhabited. For more information and a complete list of exceptions, see “Home Sellers in Michigan: Your Disclosure Obligations.”

Using the Information in the Disclosure Statement

Because you will likely receive the disclosure statement prior to signing a purchase agreement, take this opportunity to review it carefully. Use the information contained within to develop the terms of your offer to purchase. For example, if the seller discloses that the dishwasher does not work properly, you may wish to lower your offering price on the house in the amount of a new dishwasher. Or, you may wish to add a provision to the purchase agreement stating that the seller must provide a new dishwasher prior to the closing.

You may also use this information to schedule additional inspections on your property. If the seller indicates that there is a termite issue, for example, in addition to the home inspection, you may wish to arrange for a special termite inspection prior to closing.

In some cases, the disclosure statement may reveal issues that cause you to lose interest in the sale. Although disappointing at the time, you will likely be in a better position walking away from the transaction earlier rather than later.

If the Seller Does Not Provide the Disclosure Statement

As stated above, the seller is required to give you the disclosure statement prior to signing a purchase agreement. If the seller does not do so, you may terminate the purchase agreement and not go forward with the sale. In practice, however, if both parties want the purchase to occur, they will work together in satisfying the disclosure requirement.

Minimizing the Risk of Unknown Defects

There are things that you can do to protect yourself against unknown property defects. First, as stated above, make sure to review and understand the disclosure statement. Follow up with the seller on items that are disclosed or marked as “unknown” on the statement. You may wish to follow up with a special inspection concerning both the “unknowns” and the issues or defects that the seller acknowledged.

Inspect the property on your own. Are there water marks on the ceilings? Are there cracks in the wall? Does the basement smell musty or moldy? Is there a part of the house that looks like it was an addition? Don’t be afraid to conduct a thorough inspection and follow up with the seller on any issues that you identify.

Always make sure your purchase contract contains a contingency allowing you to get a professional home inspection and to call off the deal if you’re dissatisfied with what the inspector discovers. The home inspector will examine the property and create a written report advising you of its problems before the sale closes. See “Getting a Home Inspection” for more tips on this part of the process; and “How to Remove an Inspection Contingency When You Buy a House” for a discussion of how to negotiate over needed repairs.

Remember that you have a right to full information about the property that you are about to purchase. While you may have a legal claim against the seller if he or she misrepresented information, in most cases, if there is an issue, you will be responsible for fixing the problem. So, ask lots of questions and inspect the property fully for your own benefit and protection.