Have you ever closed a deal on a new home before? This can be a daunting process for first time buyers.
In hot real estate markets like Nanaimo, closing on a home purchase can be even more fast-paced and stressful.
It is important to understand how this process works, and to have a plan when you are looking for homes in an area that you like.
Read on to learn about the timeline you will follow, and some practical tips on closing from a Nanaimo realtor you can trust.
Negotiating An Offer
Once you have completed your home viewing and decide you want to focus on closing a home, you will need to negotiate an offer.
The term negotiate is enough to make many people nervous. Working with an experienced real estate agent makes this process much easier.
Negotiating an offer means making an offer for the purchase price of the home and determining the closing date, escrow deposit, and inspections.
Once these details are negotiated and agreed upon, you are officially on the road to closing on the home.
Time Frame: 1 – 3 days
Submit Earnest Money Deposit
An earnest money deposit is an amount of money the buyer submits to show the seller that they are committed to buying a home. Once this step is taken, the home is taken off the market to show that the seller considers your offer to be legitimate.
The earnest money deposit is submitted to the listing agent, who will then deposit the money into an escrow account. This account is managed by a third party who is unrelated to the transaction.
From this account, the earnest money deposit will be applied to your down payment on the home if the rest of the process goes smoothly.
Time Frame: 4 – 12 days
Order Title Search
Your next step will be done with a real estate lawyer who specializes in buying property in BC.
Your lawyer will conduct a title search at your local property registry office. The results of this search are all records and documents related to the property.
The purpose of the title search is to ensure there are no deficiencies or liens against the property.
A property lien is a notice that a creditor is owed money by the owner of the property. The creditor could be a homeowners association, tradesperson, or a lender (in the case of a mortgage lien).
We don’t need to get into the details of liens–all you need to know is a good lawyer will scrutinize title records to ensure there are no outstanding problems that could get in the way of your deal.
Time Frame: 14 – 21 days
Conduct Home Inspections
A home inspection is a very important part of the closing process.
This is your best shot to learn about any problems associated with the property. There are several different types of home inspections which are meant to uncover different problems.
A general home inspection is standard practice in real estate. This inspection is meant to cover the basics of every important system and structural part of the home including structural integrity, appliances, plumbing, electrical, HVAC, roofing, and much more.
If an inspector raises concerns about a part of the home, you can conduct additional inspections to get more details about the problems.
You could conduct specialized inspections for pests, sewage systems, roofing, asbestos (for homes built before 1990 when asbestos was commonly used for insulation and fireproofing), and other types of inspections depending on unique features of the home.
The buyer is responsible for scheduling these inspections, and you may also attend the inspections and ask questions if you wish.
Time Frame: 7 – 14 days
Finalize Purchase Agreement
Now that you are fully aware of the condition of the home, you can finalize the purchase agreement, which is signed by the home buyer and seller.
After this step, you will set an appointment with your mortgage lender to complete your application.
Time Frame: 1 – 3 days
Order An Appraisal
A mortgage lender will appraise the value of the home. This step ensures the buyer and the lender are paying a fair market value for the property.
In order to move on to the next step, the appraiser will need to appraise the property at a value at or above the purchase price of the contract.
If the appraisal is determined to be lower than the purchase price, you may need to renegotiate the seller to a lower purchase price.
Time: 7 – 21 days
Receive Conditional Loan Approval
After your appraisal is completed, you will submit a loan application. This doesn’t mean it is time to sit back, relax, and wait for your loan to be approved.
You will work with an underwriter who will review your finances before issuing a conditional loan approval.
This means you will need to meet financial conditions to be approved for the loan. These conditions could include providing income and bank statements to verify your income, or verification of mortgage insurance.
Time: 14 – 31 days
A final walkthrough of the home is an important part of the process that should be negotiated early on.
This walkthrough is the last chance for you to confirm that necessary repairs have been completed, and all of the seller’s possessions have been removed from the home.
This is also when the lender will provide closing disclosure, a document that outlines the final costs and terms of the loan. When you sign off on this document, you can finally move on to the closing.
Time frame: 1-2 days
Closing Your Home Deal
You’ve done it! When you meet the seller on closing day, you will sign final documents and provide a cashier’s check in the amount that was outlined in the closing disclosure statement.
Once the closing is done, the earnest money deposit is distributed by an escrow agent to the parties of the deal.This process takes approximately six weeks to complete.
Want to know how to close a deal successfully in the Nanaimo real estate market? Get in touch with a professional at Jeff King Real Estate.