The Closing Process
Congratulations, your offer was accepted! So what happens next and when? While there are many tasks to be completed before you legally own the property ("getting the keys"), most will be handled by the title company, your lender, the seller's agent and me. Below is a graphical representation of all the steps. Note the number and types of documents may be slightly different than what I describe below but the steps will be pretty much the same.
It looks pretty daunting but fortunately, you only have to worry about the blue items and I will be there to guide you each step of the way. So, what is the next step?
Due Diligence Period
The due diligence period starts on the day we receive the seller's signed acceptance of your offer. These are calendar days; weekends and holidays count. Usually, the due diligence period is 10 days but it depends on what is in the contract. This is a critical time when you perform all inspections and any other necessary tasks in order to be certain you wish to purchase the home. During this period you can cancel the contract for ANY reason and get your earnest money back. Canceling the contract after the due diligence period will usually result in your losing your earnest money. What are your tasks during this critical period?
- Order and have executed a home inspection. I have referrals but you are welcome to use any licensed inspector you like. The cost of the inspection depends on the size of the home and whether it has a pool but generally an inspection costs from $300 and up. I will be there for the inspection and I encourage you to be there as well. An inspection will typically take from one to two hours. Once the inspection is complete you will receive a written document describing the condition of the home and any needed repairs. If you are buying the home "As Is" remember that you will be the one paying for all the repairs.
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Contact your insurance company and have an "Insurance Binder" sent to me. The reason you want an insurance binder instead of a verbal quote is that it forces the insurance agent to enter your new home's address in to their system and generate the actual price for your specific home. Why does this matter? If insurance claims have been filed against the home in the past, the cost of insurance could be higher than normal; MUCH HIGHER! How much higher; maybe thousands of dollars per year higher. So, get the binder ordered and sent to me. My email address is EricFernwood@gmail.com.
- Contact your lender and complete any additional paperwork that they need in order to get the loan package to underwriting.
- "As Is" or with disclosures
- "As Is" part of what "As is" means is that you do not received any disclosures on the condition of the home. Properties sold "As Is" are usually sold by a bank who acquired the home by foreclosure. Since the "bank" has never occupied the home (it's unlikely anyone from the group that manages foreclosed properties at the bank has ever actually seen the property) so they have no knowledge of the home. Part of buying an "As Is" property is signing a notarized document declaring that you understand you are buying the home as is. This will have to be submitted along with the other documents. Click here for a copy of this document which you will have to have notarized. Remember not to sign it until you are at the notary; they have to witness you signing the document.
- With Disclosures - Review these disclosures carefully. If there are problems noted, you should tell your property inspector so he can investigate further if necessary. Once these are reviewed you will need to sign them to show you have received them. If you are purchasing a foreclosure, you will not receive any disclosures since you are buying the home "As Is."
- Order a home warranty - This is entirely optional. However, especially with air conditioner repairs, a home warranty can save you thousands. A home warranty is essentially an insurance policy for your home. By paying an annual fee you are covered against many major repairs. Do you have to buy a home warranty? No. Do most people? Generally, the older the home the more likely you are to need one. How much does a home warranty cost? $350 to $400 or more per year. What does it cover? It depends on the home warranty company's specific contract. Click here for a sample contract description from Old Republic Home Warranty. Below are links to two providers that are very popular:
- Old Republic
- American Home Shield
About 10 Days After Escrow is Opened
- The title company will issue a preliminary title report. You need to review this report as it lists all claims and liens against your new home's title. All liens will be paid off by the seller before close of escrow; you will not be accepting any of these debts. Most of what you will see on the preliminary title report is that various entities own specific rights to your land. For example, the municipal airport owns the air rights, the water district owns water rights, etc.
- If your new home is in a common interest community (has an HOA), a specific set of documents must be ordered and you will need to review them, especially sections titled something like: "Restrictions of Use". Once you review these documents, you will sign a document called a "Certificate of Resale" which states that you have received, reviewed and accept the limitations imposed by the common interest community. Who orders the documents varies and I will let you know if you will order them (and how) or if the seller will provide them. Note: a common question is "Can I review these documents for you?" No, I cannot. The reason is a combination of the fact that I am not a lawyer and I don't know what is significant to you and what is not. For example, one person may be delighted that no one can park an RV in front of the home for more than 24 hours. Another person may find this so objectionable that they want to cancel the contract. By the way, you typically have 5 calendar days to terminate the contact once the HOA documents are received. Ask me about this if you have questions.
- Now is also the time to be packing. If you need a local mover (or any other service) please ask. I have referrals for almost any service you might need.
About 5 Days Before Close of Escrow
Once Loan Documents are Ready
- Once you lender has delivered the loan documents to title, we will go to the title company together to sign them. You will not see the seller, they sign at a different time. Typically, it takes about an hour to sign all the documents. Note: you will need to bring a legal photo ID such as a driver's license or a passport.
- One critical document you will receive is a Closing Statement. The closing statement plus a photo ID are what you will need to change the utilities into your name. Note that as soon as the deed is recorded the seller will turn off all utilities and you don't want your first day or two in your new home to be without electricity, water and gas. The phone numbers can be found under Key Phone Numbers on this website. If any of them are incorrect, please let me know so I can keep it updated.
Getting the Keys
Once all the documents are signed the title company puts everything together and sends it to the lender for funding. Once funding is received by title they will record your deed at the county court house. This process usually takes two to three business days. Once recording occurs, I get a phone call and I will bring your keys to you. You are now a home owner!!
A Few Key Items Just After Close of Escrow
- Get the utilities transferred into your name. The electric company does not do same day turn-on's and the do not work on the weekends. Here is a page with the phone numbers.
- Get a replacement mailbox key.
- Arrange to have the locks changed; no telling how many people have keys. Call me for a referral.
- Have carpets cleaned.. Call me for a referral.
- Have the home cleaned.. Call me for a referral.
- Have any messy repairs completed before you move in. . Call me for a referral.
I have referrals for most services that you will need; both now and any time in the future. My services to you don't end with the close of escrow.
Contact me if you are considering buying or selling Las Vegas real estate. You will be glad you did.
...Eric
Eric Fernwood
RE/MAX CENTRAL
8400 W. Sahara Ave
Las Vegas NV 89117
Email: EricFernwood@gmail.com
Website: www.EricFernwood.com
Investment Blog: Blog
YouTube Channel: YouTube Channel
Cell: 702-358-8884
Fax: 702-202-2020
© 2010, 2011 Eric Fernwood. All rights reserved.
