Inspections & Appraisals

The Process

Initial Agreement and Deposit

An effective purchase agreement is a legally binding arrangement between buyer and seller. A few things to keep in mind as you move through this stage:

• Keep written records of everything, including verbal agreements, counter-offers, and addendums. We can assist in drafting all written documentation and ensure copies are provided to each party.
• Stay on schedule. Both you and the seller will be given a timeline with specific deadlines for each stage of the closing process.

The Closing Agent

Once both parties have agreed upon and signed the contract, either a title company or an attorney will serve as the escrow or closing agent, and you will deposit your earnest money. The escrow agent is a neutral third party responsible for holding and distributing all transaction funds until closing. They will research the full history of the property to confirm the title is clear of encumbrances and that any new encumbrances are correctly recorded. All contingencies in the Purchase Agreement must be satisfied before escrow closes and ownership is officially transferred.

How to Hold Title

There are multiple ways to hold title or legal ownership of a property. Each method carries different implications for ownership transfer, financing, and tax treatment. We strongly recommend consulting with a qualified attorney or tax advisor before making this decision. We are glad to connect you with trusted professionals in the area.

Inspections

As part of the Purchase Agreement contingencies, you will schedule a licensed property inspector to evaluate the home within the agreed timeframe. Inspectors will assess the overall condition of the property and flag any concerns. You may also choose to bring in specialists, such as roof or plumbing inspectors, for a more thorough review.

For commercial properties, an environmental audit or soil test may be required by the lender. If inspections reveal issues not addressed in the Purchase Agreement, you have the right to request a renegotiation of terms, typically the purchase price. Once you are satisfied with the inspection results and the agreed terms, contingencies are removed.

Appraisals and Lending

Stay in consistent communication with your lender so you are aware of any documents needed to finalize loan approval. If the Purchase Agreement is contingent on financing, the lender will require a home appraisal conducted by a licensed third-party appraiser. The appraiser will confirm that the property's value supports the investment. Appraisers evaluate value based on factors including building costs, square footage, operating income, and comparable sales.

Check in with your lender two weeks before closing to confirm the loan will be approved on time.

Association Approval

Some properties require approval from a homeowners or property association prior to closing. If this applies, request all relevant rules, regulations, and required documents from the seller early in the process. Once approved, your closing agent will request the original approval letter so it can be recorded with the deed.

Property Insurance

Basic property insurance protects your investment from damages including fire, theft, and select weather events. While coverage may not be legally required in every state, most mortgage lenders will require it. Depending on your intended use of the property, you will need either homeowners insurance if you plan to live in the home, or landlord insurance if you intend to rent it out as an investment.