Thirty Days of Real Estate – Day 17: Under Contract

Real Estate with Dallice: Don’t buy furniture as soon as you go under contract!

The last 5-6 years have been brutal to Buyers in this area. Competition is stiff, prices rise faster than most can save for a down payment and being rejected is just not fun! But now that you are under contract you have but a night to celebrate and then we are back to work

Earnest money is due

In all likelihood, your EM needs to be deposited with the Listing Brokerage or the Title Company in the next 2 business days. It’s not a hard task and I’m here to help, even if that means driving it there myself. What is important to note, is that if you fail to deliver the EM in time the contract is void. And while you might be saying “the seller wouldn’t really do that though”, I’m here to say they COULD. Put yourself in their shoes: Last night they accepted your good offer. This morning they got a way better one. As the Seller, they have limited ways to escape a Contract to Buy with you, but if you don’t deliver the EM on time, you just gave them an “out.

Order a home inspection

I can help with this too. I have a number of trusted inspectors I can refer you to.  It’s as easy as checking your calendar then calling someone. They will need some basic info about the house and contact details for the Listing Brokerage. I can deal with that on your behalf after you have scheduled etc. The inspection period you have is a gaping hole of time that allows you to bring in all manner of professionals to verify the condition of the property.

A general inspection is a great start, but you may want to ask a structural engineer if it’s possible add that room you envision or have the place tested for lead paint/mold/asbestos/radon etc. If there is a well, I’d recommend a specialist that that. Same for septic systems. Do you need a termite inspection? It’s not common around here but it’s more common out east on the plains to find termite damage. In any case, it’s your prerogative. I have had clients test for electromagnetism, do soil sampling, get a roofer out to further investigate installation or damage and much more! The point is, you need to get cracking on this because once the Inspection Objection and/or Inspection Termination Deadlines have passed, so have some of your options.

Loan Application

Do you need a mortgage to pay for the property? If the answer is yes, then waste no time getting a complete loan application and supporting documentation to the lender. Until they have what they need, they cannot lock your rate, order your appraisal or give you guidance about next steps. PLEASE read my post on credit scores and pre-qualification. DO NOT get all giddy about the new place and start down the road of furnishing it before you own it. Even if you are not immediately spending the money, if it involves some sort of extension of credit. You are playing with your credit score and perhaps jeopardizing the ability to qualify for the lowest mortgage rate or cheapest closing cost. (For Example: Furniture Row and their 5 years interest free gambit is tempting…But dont go there until the Closing docs are signed and keys are in hand!)

Survey

Does your lender or the title company require a survey? Would you just prefer to have one? It maybe that there is no fence, or fence that looks like it has seen better days or you have plans that come close to the boundaries the property. If your plans for this property include a new fence, barn, extension on the house that is permissible only if you don’t venture into the 25′ setback or utility easement, I’d advise getting a survey or ILC and making the Contract contingent on your satisfaction. 

Seller Assisted Contingencies

If you are working with me, there are likely to be several under the Due Diligence Documents category. We have no doubt asked the Seller to provide documentation about various things: Paid invoices for work done, warranty paperwork for the roof or windows or HVAC systems, building permit copies for work recently completed, past inspections, any leases or easements (not recorded) and more. The seller has the responsibility to get this info to you, but you have to read it and satisfy yourself there is not a deal breaker in there.

If the property is part of a Home Owners Association, the Seller will also be sending us HOA documents for your review. Budgets, financial documents, meeting minutes, covenants and restrictions, bylaws and copies of any letters/assessments they might have received but not yet paid for. You, as the buyer, should read these carefully and ask questions where clarification is needed. I will help locate the right person to answer them.  If you have a dog, a boat, an RV, like to dry your laundry outside, feel the need to paint your house pink or put in a bay window, this may not be the right community for you. Better to learn that now, than after closing!

Insurance

The Colorado Contract to Buy gives you the right to review the cost and coverage of your home owners insurance. Rarely to people stumble upon surprises with coverage or cost, but finding out the place has had multiple insurance claims after flooding, for instance, is going to be a conversation worth having. If insurance is a deal breaker, we can safely terminate the Contract to Buy on or before the Insurance Objection Deadline and run away with your earnest money! If you leave it too late to investigate this, you are essentially telling the Seller you are fine with the insurance and “let’s proceed”.

 

It seems like you are going to be busy. Yep!

But like the saying goes: “How do you eat an elephant? One bite at a time.”  We’ll be taking it one step at a time. I’ll be guiding you along a well worn path to closing, sending you reminders and checking in with you frequently. Soon enough, this part will be but a blur in the rear view mirror as you dive into packing and unpacking (oh, joy!) and make the new place into your own.

Until then… Don’t forget family time or date night or a drink with the girls. It’s important to check out for little spells too and take a break from your homework. 🙂

 

 

 

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