A STEP-BY-STEP BUYER'S GUIDE

The following guide contains some key milestones which will take place on the path to closing. Here is what you can expect in the weeks ahead.

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Step 1: purchase contract

Upon contract acceptance, the Purchase Contract will be sent to the Title Company and Escrow will be opened. We provide the Title Company with your contact information and they will reach out ASAP to arrange pickup and delivery of your Earnest Money. We also send all pertinent documents to your Lender so they can start getting your loan in process.

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Step 2: if you are financing your property

Expect regular requests for information from your Lender throughout the process. Loan process milestones include the Appraisal, Loan Approval (which may be with or without conditions), the Final Loan Approval, the Clear to Close, and issuance of the Closing Disclosure (CD). Your Lender is your resource for all questions about your loan.

When your Lender asks you for documents, return them as soon as possible, even if it seems redundant and annoying. The Lender is following a bevy of federal regulations, and depending on the bank, the verifications that are required are often overwhelming.

If you are receiving gifted funds for your purchase, please discuss with your lender how to appropriately receive these funds so they do not raise a flag with the underwriter.

Do not make any major purchases, take on new debt, change jobs or make other major life changes until after we have closed on the property. Many lenders do another credit check a few days before closing, and changes to your credit profile could cause a denial in your loan application.

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Step 3: earnest money

Your Earnest Money must be delivered to the Title Company no later than the next business day after the Purchase Contract is accepted. This Earnest Money deposit needs to be verified by your Lender, so it needs to come from your account via personal check or wire. No cash, money orders, or cashier’s checks are allowable if the property is being financed.

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Step 4: preliminary title commitment

Usually within the first week after Escrow is opened, we will receive a Preliminary Title Commitment which will show us if there are any title issues that need to be resolved prior to close of escrow. Perhaps the Sellers’ names are incorrect, or there is a lien on the property. These are all things that the title company will address to insure that you are provided with clear title to the property at closing.

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“Do not make any major purchases, take on new debt, change jobs or make other major life changes until after we have closed on the property. Many lenders do another credit check a few days before closing and they are very skittish about changes to your credit profile.”

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Step 5: seller disclosures

From the day after the contract is accepted, the Seller has:

  • 3 calendar days to provide the Seller Property Disclosure Statement (SPDS)
  • 5 calendar days to provide us with an Insurance Claims History on the property going back 5 years or to the day they purchased the property.
  • 5 calendar days to provide us the Lead-Based Paint Disclosure (if the property was built before 1978)
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Step 6: inspection period

The Inspection Period begins the following calendar day after the contract is accepted by both parties. It is generally a 10-day period in which you may perform your due diligence and make sure the home is right for you.

  • A Home Inspection is not contractually required but is highly recommended. They cost anywhere from $350-600 (depending on the size of the home), and if you receive a Termite Inspection (required on FHA loans), they are usually an additional $60 or so. I highly encourage you to order the Home Inspection as soon as possible. Together we will meet with the inspector to review the findings at the home.
  • If further detailed inspections are required, we will order those with specific trades (i.e. roofer, plumber, pool, electrician etc.)
  • We encourage you to go to the property at various times of the day and independently try and learn about the property you are purchasing. Even talk to neighbors!
  • Please read and use the Buyer’s Guide Advisory you received to help you understand the inspection process and research the property as best you possibly can.
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Step 7: buyer’s inspection notice & seller’s response

Once the inspection is complete, you will decide which items you would like to request to be repaired at the property. The document requesting the repairs is called the BINSR (Buyer’s Inspection Notice & Seller’s Response).

  • Once delivered, the Seller has 5 days to respond to the BINSR. If the Seller does not respond, it is still considered a response. A non-response implies they will NOT make any repairs and you must take the home in as-is condition.
  • Upon receipt of the Seller’s response, you have 5 days to decide if you would like to accept their terms or walk away and receive your Earnest Money back.
  • Please keep in mind when submitting an offer on a home that Sellers are typically reluctant to perform repairs if the offer is not close to the asking price. Per the contract, they are also not obligated to perform any repairs on the home, as the contract technically states that the property is being offered in as-is condition.
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Step 8: appraisal

The Appraisal can be ordered as soon as the contract is accepted and that is best for the Lender. However, it can be beneficial to err on the side of caution and wait until the BINSR has been completed. If the Seller is unwilling to compromise on the BINSR and you decide to walk away, then the Appraisal cost would be wasted. The cost for the Appraisal is typically $500-600 and is required for the loan. It is the Lender’s way of utilizing an unbiased, third-party to determine if the home is worth the value of the offered price. If the home does not appraise at the offered value, the Lender can only loan out the amount it appraises for. At that point, there are four options:

  1.  We renegotiate with the Seller to reduce the original number they accepted,
  2. You come out of pocket with cash to cover the gap between what the home appraised for and what the contract price is.
  3. You both choose to compromise and meet in the middle, or
  4. You elect to cancel the contract and receive your Earnest Money back.
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Step 9: the path to closing

CLOSING DISCLOSURE: Once we are cleared to close, your Lender will initiate the Closing Disclosure (CD). The CD must be acknowledged (via e-mail is ok) no less than 3 business days prior to the signing of the Loan Docs.

PRELIMINARY WALKTHROUGH: A few days prior to Close of Escrow, we will schedule a Walkthrough of the property to verify that all of the repairs have been completed and that the property is in the same condition as it was at the time of purchase.

ESTIMATED SETTLEMENT STATEMENT: Once Loan Docs are sent to the Title Company, we will receive an Estimated Settlement Statement showing all of your debits, credits, and the amount required to close.

CLOSING DOCUMENTS & COSTS: The Title Company will call you and set up a time for you to come in and sign your Closing Documents.

PLEASE KEEP IN MIND THAT IN ARIZONA, THE SIGNING OF DOCUMENTS DOES NOT CONSTITUTE CLOSING. All Closing Documents must be returned to the Lender, and the Lender has to fund the loan before the Title Company
can release the file to record. 

FINAL WALKTHROUGH: The evening before or morning of Close of Escrow, we will conduct a final walkthrough (if necessary) to confirm that the property is in the same condition (including repairs) as the time the contract
was written.

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Step 10: it’s all yours!

Once the file has recorded through the Maricopa County Recorder’s Office, then the property is officially yours! We will then coordinate a time to meet at the property and keys will be handed over. Keep in mind we do not recommend having movers arrive until the day after Close of Escrow at the earliest as we do not have control as to when the Recorder’s Office will record the file.

Congratulations!

After signing the final paperwork to complete the purchase, you are now the owner of a new house. It may take a few days for your loan to be funded once the paperwork has been returned to the lender, but once that check is delivered to the seller, you’ll be all set to move into the home of your dreams.

Work With Ally

Ally’s passion for real estate is fueled by her love for helping others and her desire to make the home buying or selling process as smooth and stress-free as possible. Contact her now!