Inspections & Appraisals

The Process

Initial Agreement and Deposit

A purchase agreement is a legally binding arrangement between a buyer and a seller. To protect everyone involved and keep the process moving smoothly, keep these principles in mind:

• Document everything in writing, including verbal agreements, counter-offers, and addendums. We can assist in drafting all written records and providing copies for each party.
• Stay on schedule. Both you and the seller will be working within a defined timeline to complete each stage of the closing process.

The Closing Agent

Once both parties have signed the contract, either a title company or an attorney will serve as the escrow or closing agent, and you will submit your deposit. The escrow agent is a neutral third party responsible for holding, receiving, and distributing all funds connected to the transaction until closing. They will also research the complete title history of the property to confirm that it is clear of encumbrances by the closing date and that any new encumbrances are recorded correctly. Before escrow closes and ownership officially transfers, all contingencies outlined in the Purchase Agreement must be fully satisfied.

How to Hold Title

There are several ways to hold title, or legal ownership, of a property. Each method carries different implications for ownership transfer, financing, collateralization, and taxation. We strongly recommend speaking with a qualified attorney or tax advisor to understand which approach best serves your situation. We are happy to connect you with trusted professionals in both fields.

Inspections

As part of the contingencies in your Purchase Agreement, you will schedule a licensed property inspector to evaluate the home within the agreed-upon timeframe. The inspector will assess the condition of the property and identify any issues that need your attention. For areas of specific concern, such as the roof or plumbing, you may want to bring in specialists as well. For commercial properties, your lender may require an environmental audit or soil assessment. If the inspection reveals problems not addressed in the Purchase Agreement, you have the right to request a renegotiation of the terms or purchase price. Once you are satisfied with the inspection results and the terms of the agreement, the contingencies are removed and the process moves forward.

Appraisals and Lending

Stay in regular contact with your lender throughout the process to ensure documents are submitted promptly and nothing delays your loan approval. If your Purchase Agreement is contingent on financing, the lender will require a formal property appraisal by a licensed, independent appraiser. The appraiser will confirm that the property's value supports your investment. Appraisers assess value based on a range of factors including building costs, square footage, comparable sales, and operating income where applicable. Check in with your lender approximately two weeks before closing to confirm everything is on track and the loan will be approved on time.

Association Approval

Some properties require approval from a homeowners or property association before a purchase can be completed. If this applies to your property, request all relevant rules, regulations, and required documentation from the seller as early as possible. Your Purchase Agreement will establish a timeline for submitting paperwork and scheduling any required meetings. Once approved, your closing agent will obtain the original approval letter to be recorded with the deed at closing.

Property Insurance

Standard property insurance protects your investment against losses from fire, theft, and certain weather events such as wind or hail. While most states do not require property insurance by law, most mortgage lenders do. The type of coverage you need will depend on your intended use of the property. If you plan to live in the home, homeowners insurance is the appropriate policy. If you intend to rent it out as an investment, landlord insurance is the coverage that fits.