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The Basic Process
I want to first lead with my disclaimer: Every deal is unique and this guide does not encompass every possible aspect and scenario in a real estate transaction. Please consult your real estate agent for specifics unique to your real estate contract. Hopefully that will be us.
The Northern VA Sales Contract and Deposit
Once completely signed, all terms agreed upon, and deposit collected, the sales contract is a legal arrangement between a potential purchaser and the Northern VA property owner. You are officially ratified, and all the clocks on the agreed up deadlines start.
Some important tips to keep in mind to streamline the process:
- All terms need to be in writing. All counter-offers, addendums, notices, and home inspection negotiations must be signed written agreements. We will draft all the paperwork for your purchase and make sure that you have signed copies of everything.
- Stick to the schedule. Now you are ratified, you and the seller will have a timeline to meet deadlines in the process of closing contingencies to move towards closing (a.k.a. Settlement) of the real estate contract. Meeting the requirements on time ensures a smoother flow of negotiations so that each party involved is not in default of their agreements. During the process we will keep you constantly updated, so you will always be prepared for the next step.
Once you have a ratified sales contract, and if you have a home inspection contingency included, you will need to have a licensed Home inspector. We have our go-to home inspector that we believe do an excellent job which we can also schedule or you are welcome to choose one of your own. However, it must be scheduled immediately as we must inspect the property within the time frame that was agreed upon in the Northern VA sales contract to purchase.
A home inspector normally only inspects the home itself and you will need other specialized inspectors for radon, pools, lead based paint, etc. If your home inspector identifies other more serious issues, there may be need for further inspections by structural engineers, mold experts, etc.
Depending on your contingencies and the outcome of these inspections, one of three things may happen:
1. The buyer will accept the home in its condition with no further negotiations, or
2. The buyer, provides the full inspection report and requests repairs or settlement credit in lieu of repairs for the deficiencies identified by the inspector, or
3. Void the entire contract.
The Settlement Agent
You, the buyer, can select a title company of your choice as a closing agent. Most home buyers do not have a preference and are happy with our recommendation.
The Settlement company and I will work to coordinate all the details of your closing. The settlement agent will research the complete recorded history of the property to ensure that the title is free and clear of encumbrances by the date of closing and that all new encumbrances are properly added to the title. Your settlement will be conducted by an attorney or licensed settlement agent. This person duties include obtaining the loan documentation, verifying with you the terms are accurate, explain all documents to your satisfaction, providing you and your lender title insurance, and verifying the sellers loans, liabilities, and property taxes are paid. They will have you execute all signatures and insure that the deed to the property is transferred to you properly and accurately.
How to Hold Title.
Different methods of holding title by two or more in Virginia have different legal, estate and tax implications, especially when selling or upon death of the title holder. Tenancy in common and tenancy by the entirety are most common, however you may wish to consult an attorney and/or tax advisor.
- Co-Ownership – A form of ownership in which two or more persons have undivided interest in the same property.
- Joint Tenancy – A form of ownership where the entire estate passes to the survivor on the death of the other joint tenant(s)
- Tenancy in Common – A form of concurrent ownership in which each owner possesses an undivided right to the entire parcel of land, with each owner’s rights similar to those possessed by a sole owner.
- Tenancy by the entirety – Co Ownership of property by husband and wife that is non-severable without the consent of both; on the death of either, the survivor remains as sole owner.
- Tenancy in Partnership – A form of co-ownership in which each partner owns partnership property together with the other partners; each partner’s share is treated as personal property; partnership property of a deceased passes to the surviving partners.
Appraisal and Lending.
From Contract to settlement it is imperative that you keep in close communication with your trusted lender. They will request documents multiple times, which are needed immediately to approve your loan application and fund your loan, read this article Mortgage Application: Why So Much Paperwork?.
If the sales contract has an appraisal contingency, then the property will be appraised by a licensed appraiser to determine the value for the lending institution. This is done so that the lending institution can confirm their investment in your property is accurate. Appraisers are specialists in determining the value of properties, based on a combination of square footage measurements, building costs, recent sales of comparable properties, operating income, etc. When you are within two weeks of closing, double check with your lender to be sure the loan will go through smoothly and on time.
Owners Association Approval. (HOA/COA)
If the property that you are purchasing is part of a home owners or condo owners association, you are required to be provided the rules, regulations, and other important documents from the seller for your review. These are called the association resale documents.
When these documents are ordered, an association site inspection is initiated for the property, to confirm there are no association by-law violations. If there are violations, you and your trusted REALTOR will need to confirm these are fixed and the property is re inspected by the association.
Here is an article with further detail, What to Expect from an HOA in Northern VA.
If you are obtaining a mortgage loan, your lender will require you to purchase a certain amount of insurance on the property. You may be able to save hundreds of dollars a year on homeowners insurance by shopping around for insurance. You can also save money with these tips.
- Higher deductible. Increasing your deductible by just a few hundred dollars can make a big difference in your premium.
- Ask about discounts. You may be able get a lower premium if your home has safety features such as dead-bolt locks, smoke detectors, an alarm system, storm shutters or fire-retardant roofing materials. Persons over 55 years of age or long-term customers may also be offered discounts.
- Insure your house NOT the land under it. After a disaster, the land is still there. If you do not subtract the value of the land when deciding how much homeowner’s insurance to buy, you will pay more than you should.
We will be happy to recommend experienced knowledgeable insurance agents for every property type.