Panic? Well, maybe a little. Besides doing
that, follow these suggestions (and your realtor's advice)
and you'll soon be the proud owner of a new home.
After you've signed on the dotted line,
you'll be asked to provide a check for the "earnest money",
showing that you are a serious buyer. In Southern California,
the standard of practice is that a deposit in the amount of
3% of the purchase price is deposited into escrow. This deposit
check may also be held by an attorney or in the broker's trust
account. Make sure that there are sufficient funds in your
account to cover this check.
The deposit check will be cashed. Assuming
the sale goes through, this money will be applied to the purchase
price of the home. If for any reason the sale is not consummated,
you may be entitled to receive all of your deposit back, less
standard cancellation fees. In certain instances, the seller
may be able to retain this money as liquidated damages. Prior
to executing a purchase contract, it would be wise to speak
with your counsel regarding whether or not it is your best
interest to have a liquidated damages clause as part of the
The period that you are "in escrow"
is often 30 days, but may be longer or shorter. During this
time, each item specified in the contract must be completed
satisfactorily. By the time you have opened escrow, you have
come to an agreement with the seller on the closing date and
the contingencies. Each contract is different, but most include
Inspection contingency. This should be completed as soon
possible after the contract to purchase is signed, as unsatisfactory
results of the inspection may mean that you will want to
cancel the contract .
contingency. Once the contract is signed, you have a
period of time to secure funding. If, for any reason, you
are unable to secure funding during the period of time granted
to you by the contract (and the seller will not provide
a written extension of time), you must decide whether you
want to remove the contingency and take your chances on
getting a loan. You may choose to cancel the purchase contract
requirement that the seller must provide marketable title.
With an attorney or title officer, review
the title report. The title must be "clear" to ensure
that you don't have legal issues regarding your ownership
on down the line.
Check into local and state ordinances
regarding property transfer and make sure that you and/or
the seller have complied with them.
Secure homeowner's insurance. This will probably be required
before you can close the sale. In Southern California, due
to such requirements as special fire and earthquake insurance,
obtaining this insurance may require a lengthy period of time.
It would be in your best interest to apply for insurance as
soon as possible after the contract is signed.
Contact local utility companies to schedule to have service
turned on when you close escrow.
Schedule the final walk-through inspection. At this time,
you should make sure that the property is exactly as the contract
says it should be. What you thought to be a "permanently
attached" chandelier that would come with the property
might have been removed by the seller and replaced with a
different fixture entirely.
You've made it! Once the sale has closed, you're the proud
owner of a new home. Congratulations!
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