Timing is of the Essence After You are in Contract
The process of buying a home can be quite intimidating for many people, especially when all of the paperwork is taken into consideration. Once you view the process in terms of separate pieces, however, it does not appear to be quite so intimidating. Below you will find information about the basic timeline for a real estate transaction. Be aware that the timeline for this process can change based on individual circumstances and whether you are buying a foreclosure or short sale property.
Bloom / Van Omen & Associates, the official real estate partner of Scottsdale.com, has a team of real estate specialists to help you find the right home and makes sure it closes. We even have a dedicated Closing Coordinator to ensure each step of the process is handled correctly and efficiently so you don't have to worry.
First Step: Deciding to Buy a Home
Considering all of the important things that will happen in your life, the purchase of a home is certainly one of the most important financial steps you will take in your life. The selection of your REALTOR� is also an important decision because he or she will provide you with the expertise and information you need to make the best decision. During this process you will need to research several factors including the area in which you wish to live, commute to work time, schools, lenders, etc. Professional REALTORS� can assist you in the process by working to narrow down the possibilities so that you can find a home that meets your needs.
Second Step: Selecting a Home and Studying the Purchase Contract
Once you have decided upon a REALTOR� and have completed the process of becoming pre-qualified for a mortgage loan, the next step in the home purchase process is to begin shopping for homes. Your Scottsdale real estate agent can help you with this part of the process by providing you with information on specific homes that meet your criteria for the Phoenix Metro area. You can also expect to receive paperwork from your REALTOR� ahead of time to review before the time arrives to submit an offer on a home. Once you find a home that you like, the next step is to submit an offer for that home.
Third Step: Submitting The Offer
Once you have made the decision to submit an offer, it is imperative that you discuss documentation with your REALTOR�. Specifically, you will need to discuss the purchase contract with your real estate agent This is the document that you will sign and which will be submitted to the Seller documenting the offer you are making on the home.
The process of purchasing the home will become somewhat more involved at this point. After the Seller accept your offer, there are particular deadlines as well as criteria that will need to be met according to the contract. These timelines and criteria will be specified in the contract. When you sign the contract, you will be acknowledging and agreeing to these deadlines and criteria. You should know that the word �day� as specified in Arizona purchase contracts refers to a complete 24-hour day. Many buyers are curious as to whether the term �day� includes holidays and weekends. The answer to this question is yes, it does. In addition, it is important to keep in mind that the purchase contract also specifies dates by which certain actions must occur by particular parties as part of the contract. In the event this deadline passes without the specified action occurring then the party who was responsible for the action will be considered to be in default and also be potentially in breech of contract. In the event there is a breach of contract, the party who has defaulted will receive what is known as a Cure Period Notice. This notice provides three days for the party to correct the action item or be in breach of contract, in most cases. If the party goes into breach of contract, the other party will then have the option to cancel the contract. Working with a trained real estate professional will keep the process on track and minimize these types of risks.
Fourth Step: Part 1 of the Escrow Process
In a real estate transaction in Arizona, the escrow company acts as a neutral third party. The earnest money you provide will be deposited with the Title Company or Escrow Company at the time the contract is accepted. Earnest money is often referred to as �good faith money� because it demonstrates your seriousness about completing the purchase to the Seller.
There are several items that must be met from both the Sellers as well as the Buyer within the first five days following the acceptance of the contract. As the Buyer, it will be your responsibility to make sure you submit your loan package to your lender.
The Seller will also need to meet certain criteria and deadlines. During this phase of the process the Seller will need to provide a Seller Property Disclosure Statement, or SPDS. You will need to review this document when it is provided to you. After you have had a chance to review the document with your REALTOR� you will be required to sign it and return it at the end of the period for the home inspection or within five days; whichever time period is greater.
In the event the home was built prior to 1978, Federal Law requires Sellers to provide Buyers with a lead based paint disclosure form. This form must be provided within five days of the date of contract acceptance. After you receive this form, you will have ten days within which time the property can be assessed or inspected. You do have the right as the Buyer to cancel the contract based on the findings during this time period. You should be aware that this form is not allowed to be faxed as it is required by Federal Law and thus is required to have an original signature.
During the next step of the process the Seller will have five days from the date of contract acceptance in which they can deliver the CLUE report for you to review. This report provides a history of claims and property insurability for the property. You will have a certain time period in which you can disapprove of the report and cancel the contract. This time period is typically five days or until the end of the inspection period, whichever amount of time is greater. In the event that you do not disapprove of any of the items present in the report, you will have five days following receipt of the report in order to procure homeowners insurance.
The Seller will have five days from the date of contract acceptance in which they can disclose information regarding the location of the property in an unincorporated area.
Ten days are assigned for the inspection period. This time period begins upon the execution of the contract. You will have the right to cancel the contract at any time during these first ten days for any reason. You will have the right to bring in inspectors as well as other individuals to evaluate and inspect the home during this time period. This time period provides you an opportunity to thoroughly inspect the home to determine whether there are any issues in the home that would cause you to change your mind about the purchase. As you near the end of the inspection period, your REALTOR� will work with you to review information that is provided from the inspections that occurred on the property. At this point the Buyers Inspection Notice/Sellers Response will then be completed by your REALTOR�. The BINSR provides you the opportunity to determine whether you wish to accept the contract in its current condition, provide the seller with a chance to correct reasonable items or cancel the contract. This form must be provided to the Seller no later than the end of day 10.
Keep in mind that once this form has been submitted to the Seller, there exists the opportunity for two different events to occur. Provided that you accepted the home with no requests for repairs, the Seller will then sign off on the form and the transaction will go forward. In the event that you made requests for repairs, the Seller will be provided with five days in which they can respond. During this time period, the Seller has the option to repair all or some of the repairs that were requested or they may choose not to make any of the repairs. After you have received the BINSR, you will have three days in which you can respond to the action or lack of action from the Seller. At this point, the decision to continue the process is in your hands as the Buyer. You can elect to accept the agreements of the Seller and continue with the process. In the event that you were not satisfied with what the Seller has agreed to correct, you also have the option to cancel the contract. In this case, you will receive the full amount of your earnest money refunded back to you.
Fifth Step: Part 2 of the Escrow Process
After the Home Owners Association Rules and Bylaws and Title Commitment is delivered by the title company, both the Seller and the Buyer will need to review the document. A time period of five days is provided to the Buyer to cancel the contract. This time period begins with deliver of the Title Commitment. It is critical that you inform the REALTOR� when you receive this document so that there will be no question about the timeframe in the event you have concerns or problems arise.
Sixth Step: Part 3 of the Escrow Process
In the event that you are financing part of the purchase of your home your lender will generally require that an appraisal be performed. The lender will generally order the appraisal. It is paid for by you as the Buyer. Keep in mind that even if you are not financing your home, it is still recommended to order an appraisal in order to ensure that you are not paying more than the value of the property. In the event that the appraised value of the home is lower than the purchase price of the home according to the contract, there are options available to you. They include:
1. Re-negotiating the sales price for the home with the Seller.
2. Accepting the price of the appraisal and purchasing the home without changing the contract. (The feasibility of this option may depend on how much money you are providing for a down payment on the home. In some cases, your lender may require that the difference between the contract purchase price and the appraisal be made up by you.)
You will typically have five days following the delivery of the appraisal in which to choose one of the options listed above.
Seventh Step: Part 4 of the Escrow Process
As the Buyer you must contact the escrow company within seven days of the close of escrow date in order to schedule a time in which you can sign three days prior to close of escrow. You must also notify your REALTOR� of the scheduled signing date. In the event that you are not able to attend the signing, the option does exist for the escrow company to send the necessary documents to you. These documents must be sent overnight and they will be sent at your expense. Once you receive the documents you will then be required to take the documents to a notary. Make sure you take your driver license with you to authenticate your identity.
Remember that it is generally a good idea to check on the status of your loan every week during the escrow period. At least three days before the close of escrow, you should also check with your lender to ensure that all of your loan documents will be completed on time. This is imperative because the loan documents absolutely must be received by the escrow company as well as signed within three days of the close of escrow. You should contact your REALTOR� in the event there is any question regarding the ability of your lender to meet this deadline. If the documents are not delivered within this timeframe without the issue being resolved ahead of time, the potential for breach of contract exists.
It is also a good idea to go order the utilities for the home during this time period. You can check with your REALTOR� for information regarding local utility providers. In fact, we offer a list of utility providers as well as contact information on our website for your convenience. Remember that you will need to have the utilities transferred into your name at the time escrow closes so that you will have all of the services you need such as electricity, cable service, water, telephone service and garbage collection when you are ready to move. In the event that the close of escrow date changes, you are required to contact your utility providers to notify them of the change and provide them with the new date.
Within three to five days of the close of escrow date the Title Company or your REALTOR� should provide you with a preliminary closing statement. The HUD Closing Statement provides you with information regarding the fees that have been charged and the amount of money that you will need at the time of closing. Be aware that in the event your loan documents have not arrived by the end of the third day before the close of escrow date you will not know how much money you need to close the loan. This is why it is critical that you remain in continual contact with your lender so you will always be aware of your loan�s status.
In addition, within three days of the close of escrow, you should take a final walk through of the home. The purpose of the final walk through is to be certain that all repairs that were requested have been made. During this walk through it is also a good idea to check the condition of the property and ensure that it is the same as it was at the time that you made the purchase offer. Provided that all repairs have been completed satisfactorily and the property is still in acceptable condition, you will be required to sign the contract at this point.
Eighth Step: Closing Escrow
Once you have obtained the amount of money that is required to close escrow you can have that dollar amount wired to the title company. You also have the option of bringing a cashier�s check to the closing. Keep in mind that you cannot bring a personal check to the closing. Generally, it is even a good idea to contact the title company to be certain that the cashier�s check from your bank will be accepted.
You will also have the choice to deposit the funds for closing when you receive the closing statement or on the day of closing. The title company and lender will generally have made arrangements at this point for the funds necessary to close escrow to be transferred. Be aware that every lender is different and your lender may have different procedures that are required for the release of funds. In some cases, lenders may accept emailed or faxed documents as signed documents in order to wire funds. Other lenders may require original signatures before they will wire funds to the escrow company.
After the funds have been released by the lender to the title company, the documents will then be sent to the county in which the property is located so they can be recorded. This is performed electronically in Maricopa County, which makes the entire process quite fast. A courier hand delivers documents in Pinal County; however. Regardless of which county in which the property is located, the documents will be delivered and you will be the proud new owner of a home. Your REALTOR� will make arrangements for your keys and garage remotes to be delivered or picked up.
Congratulations! You�re a home owner.
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