Mark Wozniak: So in this segment we are going to talk about the period after the purchase offer has been ratified by the buyer and seller but before the settlement date and that is known as the contract to close. And again depending on how long out your settlement date is it could be 30, 45, 60 days but suffice to say there is a lot of activity that goes on during this period. There are peaks and valleys but there’s a lot that goes on so let’s start talking about contract to close.
Leigh Anne Monk: Sure. One of the most important things that happen during this time frame is what we call the final financing has to occur so if there is any additional paperwork that you need to send over to your lender you are contractually obligated to get that over to him in a certain time frame that’s listed in the contract and he goes through his approval process. If you recall in previous segment we talked about that fact that you need to get a pre-approval before actually making that purchase offer but in this time frame the lender actually completes all his due diligence, all of his research on you and actually approves your loan. And so there’s actually a contingency that is typically a 14 to 21 day time frame from date of ratification in which the lender has to give us his final approval. When we have that final approval we ask if we can release that contingency through a contractual document. The second type of kind of deadline based activity that happens in this contract to close period is the appraisal itself. The appraiser is sent out from the lender and they conduct an appraisal on the home to determine if the offer price and the contractual price that both the buyer and seller have agreed to, the lender is willing to lend that amount based on that appraised value. And again that appraisal has to come in at a certain amount to go for what the contract and to be honest appraisals are so critical and so important that we conducted some additional segments that we have put together for you in our real estate video library and can look at those and learn a little more about the appraisals. The third thing that happens in the contract to close process that is really important from a timing perspective is actually conducting that home inspection. We typically see buyers willing to conduct that inspection 7 to 10 days of the actual ratified date itself. The inspection gets done and then there is some back and forth negotiation as the inspector comes up with a list of repairs that you may want to offer. The seller comes back and says yes I will repair these I’ll pay for these, no I won’t and all that negotiations occurs in the same time frame. And the fourth kind of a time based contingency that happens during this again 30 to 45 days window is what we call the homeowner’s association or condominium document review and you typically have about 72 hours/3 days to review those documents to make sure you can comply with all the rules and regulations that are a part of the subdivision.
Mark Wozniak: And that’s 72 hours once you get the documents so actually if the seller doesn’t send those to you for 10 days you wait those ten days and then you would have 3 days to respond.
Leigh Anne Monk: Exactly, exactly. But the concept here is as those timeframes come and then go beyond those contingencies are being removed. So there is some contractual paperwork that goes back and it’s simple just one page actually really easy to do. It actually removes those contingencies to show both the buyer and seller that you are moving toward that settlement date with nothing else and no other legal reason to actually void the contract to leave it because everything has been taken care of which is a really positive thing. Now another thing that happens that you may be surprised about is that the title company will also be approaching you as the buyer to ask some background information about you and they’ll actually run a title search on the home itself and that’s is something to make sure that there is no previous owner that does not come up in previous tax records. They just do some research to make sure that the rightful owner you are dealing with is the seller is that person and that there is no other liens on the property that would prevent you from actually buying the property itself.
Mark Wozniak: Right. And that information that the title company often ask for is from you the buyer are things like your social security number, your address they may ask you a little bit of information about the lender that you are going to be working with. So just anticipate those kinds of questions.
Leigh Anne Monk: Right nothing that you won’t have answer to it’s just their gathering process because they’re the ones that prepare the settlement documents and so they need to have all that information for that actual HUD 1 document that they use in the settlement. Okay during the same time frame if you asked for a home termite inspection that gets conducted at this time. Whether you pay or the seller pays that has been predetermined in the contract terms so that inspection will occur. If there are termites then mediation occurs at that point and time as well so all that’s resolved before settlement itself. If you have a private well or a septic system in your home you may also elect to conduct an inspection and that happens in the same time frame. Now some real practical things that you got to do and sometimes people forget about and it could be a real surprise if you do forget is making sure that you switch utilities into your name. And you can also work with you agent to get the names of those utilities if you’re not quite sure who services that particular area. Also you want to make sure you contact a moving company to schedule a time for the movers to come in and pack up your stuff to be ready to move into your house at settlement.
Mark Wozniak: Right so again there is so much that goes on in the same time frame and of course ends with the settlement which we’ll talk about in another segment but just be prepared as the buyer that there is a lot of back and forth documents that you need to send in. A home inspection that you need to attend, so just know that the activity on your end did not in any way end with the writing of that purchase offer. So this again has been Contract to Close.