Archives for February 2014

So, you’ve looked all over the Albuquerque metro home market and have finally found the home you love. You’re ready to write up your offer on it and sign a real estate contract. Keep in mind there are several steps you’ll go through from now until closing.

1. Buyers’ Contingencies: Remember, as the buyer, your offer is contingent upon several things, such as a property inspection, a disclosure review, loan approval, an appraisal, etc. Such contingencies enable you, the buyer, to opt out of the contract if unforeseen problems pop up.

2. Sellers’ Disclosures: Sellers are legally required to provide homebuyers with disclosure documents, a preliminary title report, copies of city reports, and any other relevant local documents. Buyers must be forewarned of any known issues that might affect the property’s habitability or value. These factors include zoning, legal, structural, plumbing, sewer, waste, roofs, gutters, electrical, HVAC, swimming pool, HOA, environmental, etc. If something is disclosed here that’s a deal-breaker for you, you can still get out of the contract.

3. The Appraisal: This is your lender’s way of ensuring the contract price is the correct price. The lender will send out a third-party appraiser, which the buyer pays for, to confirm that the contract price is in line with the neighborhood’s comparable sales (comps). If it’s not, the bank can deny the loan or change its terms.

4. Inspections: Your real estate contract gives you the right to a home inspection. I’ve talked about the four critical parts of a good home inspection. In a general home inspection, the inspector checks the home from the foundation to the roof and investigates all major systems and components. I strongly advise you, as the homebuyer, to follow along with the inspector to learn more about the property. The inspector may suggest having a specialist come out, such as a roofer, electrician, or an HVAC specialist. If further issues arise, you may be able to negotiate a fix or credit with the seller. Otherwise, a major issue can allow you to walk via your inspection contingency.

5. Loan approval: In addition to the appraisal, the bank will need to fully approve your credit, debt, and income history. The bank will also check to ensure there are no liens recorded against the property which could affect its value. The bank can take up to 30 days to complete its review, which should (hopefully) get you one step closer to closing.

6. Final walk-through: Just before closing, you should walk through the property one last time to carefully check that its condition hasn’t changed since you last saw it. Make sure the seller didn’t remove any fixtures or leave debris behind. You should also check that any fixes you negotiated with the seller have been completed.

7. The closing: Here in New Mexico, your closing will take place at a title company with an escrow officer. Expect to sign many documents at the closing. You’ll need to show your photo ID since your signature will be notarized. The closing statement is known as the HUD-1strong> and details your final closing costs and the money you need to bring to the closing. The funds can be wired in or paid with a cashier’s check at closing. Be sure to ask your agent for the statement early, so there won’t be any last-minute surprises.

Making yourself aware of all of these pre-closing procedures can only help guide you toward a successful closing. If you have any questions or experiences to add, please leave them in the comments below. And if you’re thinking about buying or selling your next home in metro Albuquerque, contact me today!