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From Acceptance to Closing

The period of time between Offer acceptance (thus creating a contract) to the closing date is filled with many different facets, persons and tasks that determine if and how smoothly the transaction will be completed. Both Buyer and Seller have responsibilities during this period. As your Buyer’s Agent we will assist you throughout the process to help you meet these responsibilities.

There are several crucial tasks that must be preformed. Seven important tasks are: meeting with your lender to secure loan qualification (if not already in hand); securing the loan commitment letter by the specified date in the contract; scheduling a home inspection; getting and reviewing the Inspector’s report; making requests for repairs to the Seller in writing by specified date in the contract; scheduling a termite inspection of the home to determine if treatment and/or repairs are needed, and if so to be put in writing to the Seller for remedy; and getting a survey done.

How are these services secured? We have a list of recommended vendors, with whom we have a work history. Our recommended vendors have always performed their responsibilities to the standards necessary to serve our clients’ best interests. Therefore, we can assist you by providing names of lenders, home inspectors, and termite inspectors to meet these tasks. Also, particularly related to inspections, we can schedule the times for them to be performed so as to meet important contractual date deadline. As agents we receive no incentive from our recommended vendors other than knowing our clients needs will be met. It is against Federal and NC Real Estate Law for an agent to receive gain of any kind from any vendors that are recommended or used by our clients. Please know that our sole purpose is to serve you and your interests alone.

The Home Inspection

We recommend that a home inspection be performed even in the case of new construction. Why? Because it is a thorough and detailed inspection of the entire house including structural integrity, the electrical, plumbing, heating and cooling, appliances, etc. Disclosure and discovery are fundamental in this phase of the process. A home inspection makes this possible. Knowledge is power in this regard because it allows you: to confirm or disaffirm the soundness of the prospective home; to safeguard and protect your interests; and to determine what repairs, if any, need to be requested of the Seller in writing.

Home Inspectors are licensed by the State of North Carolina to professionally perform their duties. We strongly recommend that you use a licensed inspector. The home inspection is an important part of the due diligence you perform with our assistance in the transaction process. Professional inspectors meet the standards necessary for discovery and disclosure and provide the best means to protect your interests.

On completion of the home inspection the inspector will deliver a copy of his/her report to you and to us. We will review the report with you, and clarify with the inspector any questions that might arise. Based on the review and the repairs that are deemed appropriate, we will put into writing for you a request for repairs utilizing the standard "NC Real Estate Commission Repair Request Form". The Seller can then agree, negotiate, or disagree to some or all of the requests. We will review with you what these possible options may or may not mean to you and what your options are.

The Wood Destroying Pest Inspection

Wood destroying pests are prevalent in the southeastern United States, subsequently North Carolina is no exception. Termites are the most common pests. Some, but not all, homes have a termite bond, which is a contract with a licensed pest control company to regularly inspect a home and preventatively treat it for termite infestation. Whether bonded or not, we strongly recommend using a licensed pest control company to inspect the prospective home to determine if infestation of any kind is present as well as if treatment or repairs are needed. If infestation is discovered or if there is damage due to a past infestation, we will work with you to put into writing to the Seller repair requests to remedy the situation. Also, we will negotiate repairs with and for you, if necessary, with the Seller. We will make sure you understand your options according to the contract related to wood destroying pests treatment and repairs.

The Property Survey

Some but not all lenders require a survey. However, we strongly recommend that you order a survey by a licensed surveyor. This will give you accurate information related to property lines and lot size. Also, it will identify any possible encroachments, setback violations, etc. that may impact the property.

Working with your lender

Upon acceptance of the contract we will send your identified lender a copy of the OTP/C so that he/she has the terms and dates needed to begin their work, and to meet important deadlines. He/she will want to move towards getting a loan commitment for you. The loan commitment letter, provided by the lender by the specified date in the contract, is a written commitment by the lender to make a loan to you on the specific property you want to buy. This is issued after the lender assesses and determines your qualified ability to take on the loan, and after an appraisal (ordered on your behalf by the lender) is completed. The appraisal validates that both you and the lender are making a sound investment.

The type of loan you will secure with your lender is entirely up to you. Your lender will discuss the many and varied options that are available to you given your qualification and your specific needs. Also, if you are seeking an FHA or VA loan he/she will inform you of their guidelines and what is necessary to secure that type of loan (if not already covered in pre-qualification phase).

For your information and protection, lenders are required by federal law to provide you with a number of written disclosures and regulations related to: the Truth in Lending Law (1968), the Truth in Lending Simplification and Reform Act (TILSRA - 1980), the Fair Credit Reporting Act (1970), the Equal Credit Opportunity Act (1974), the Fair Housing Act(1968), the National Affordable Housing Act (1990) and the Real Estate Settlement Procedures Act (RESPA - 1974). We can provide you information on these laws and your lender will and can answer any questions you may have as well. Generally, these laws as a whole serve two purposes for you: they specify the manner in which you are protected under the laws of the United States, and inform you and protect your interests as a borrower related to matters associated to your financial investment and commitment.

Please understand that the underwriting process, which your lender goes through after approving your loan application, is a complex, multifaceted one. The timing and process of completing the details for the loan and getting the paperwork in order depends not only on your lender’s competency but also on the work of the underwriters, often not in this community. The majority of the time, things go well, however on occasion there may be an unexpected delay or a surprise just before closing. Joanne Parker and Associates works with the lender throughout to do all we can to make sure everything is in order.

Property Insurance

Lenders require property insurance to protect their interests and this is good common sense for homeowners as well even if they are not obtaining a loan to purchase the property. You will need to contact your insurer, well in advance, to ensure that protection of your new home will commence on the day of closing. Your insurance agent can inform you of the many options available that meet and exceed the lender’s requirements. If a home is in a flood hazard area, the flood insurance coverage is regulated by federal law. If applicable, your insurance agent will tell you about what is mandated.

Working with your attorney

In North Carolina, your attorney performs critical duties and responsibilities related to your chosen property and in closing the transaction. The attorney determines that the Seller has marketable title, renders a title opinion for your Title Insurance company, assembles and prepares documents for the closing meeting, conducts or oversees the closing meeting and records the deed after closing.

To determine marketable title the attorney does a title search through the Register of Deeds Office in the county seat of the property’s location. This entails a title search through the historical chain of conveyances to determine if the title is free of encumbrances, liens, assessments, easements, or any instrument of trust. Most lenders require title insurance and if the title is clear the attorney will render a title opinion to the Title Insurance Company which forms the basis of their respective insurance policies, to you and the lender.

The Seller provides your attorney:

A deed duly prepared by their attorney as the effective instrument to transfer title to you.
An affidavit as to Mechanic's Liens that no services, labor or material have been provided within 120 days of closing; and if so, that vendors or claimants have been paid in full with a signed paid receipt, or that the vendor has waived, in writing, his lien rights to file a claim (To further protect you, your attorney will check on the day of closing, prior to recordation, that there are no new liens on the property).
Copies of leases and other related documents (if applicable), and the names and status (lease terms, payments, deposits etc.) of the tenants.
A statement from the seller’s lender as to the outstanding mortgage balance owed on the property.
Payoff instructions by seller’s lender for the attorney.
Written proof of repairs agreed to earlier in writing by the seller and you.
The Seller may also provide your attorney a bill of sale for the personal property included in the OTP/C.

We will make sure that your attorney has a clear copy of the sales contract and any other documents necessary for the transaction. Also, we will assist you as needed or requested in getting together the myriad of documents and details for your attorney.

Your attorney will receive a lender’s closing package which has all of the documents related to the loan and closing transaction that meets lending requirements and all pertinent federal and state laws. Two are of special importance: the promissory note and the deed of trust. The promissory note stipulates in writing your liability to your lender and assigns (if applicable), and your agreement to be bound by the terms set therein for repayment and other stated conditions related to the loan. The deed of trust, in essence, is an instrument that conveys interest in real property (your new home) as collateral for a debt, thus securing the promissory note.

Your attorney will prepare the documents in the lender’s closing package for the closing meeting. Your attorney will secure the title insurance policy for you and your lender. You will need to provide your attorney with: a property insurance binder that, at least, meets the requirements of the lender; a copy of the wood destroying insect inspection report, (if applicable) provide proof from you or the seller that the infestation or related damage has been remedied; and a copy of the survey to the attorney (if required or requested). Additionally, after completing his/her work your attorney will inform you as to the funds you will need to bring to closing. A certified check is usually required. You cannot write a personal check for closing. Speak with your attorney about other options you may have such as wiring.

The attorney, after receiving the lender’s closing documents, will prepare a HUD-1 Form. This is the standardized form instituted and required under the Real Estate Settlement Procedures Act (RESPA - 1974). This becomes the closing statement at the closing meeting that documents all of the financial debits and credits related to the sale and purchase of the property. Both seller and buyer interests are represented in the document and both seller and buyer sign after review and approval. We will check and review the HUD Statement with you and answer any of your questions. Your attorney can answer questions as well. In addition, we will make sure that you receive a copy of the HUD statement at the closing meeting and/or immediately after recordation. This is in addition to the copy you will receive in the final closing packet from your attorney.

Scheduling the Closing

The scheduled time and date for closing specified in the contract is usually set well in advance after consultation with buyer, seller, lender, attorney, and real estate agents. All parties are committed to meeting the target date and move forward in good faith to meet that deadline.

Closing is usually scheduled on and can be scheduled before the contract date. However, this date is not set in stone, unless it is specifically written in the contract that “time is of the essence” with regard to the closing date. We do not recommend (but will do so at our client’s request for given circumstances) inserting this language into the contract, except under extraordinary circumstances. Why? The “time is of the essence” language sets the date in concrete that literally “kills” the contract if closing does not occur, unless both seller and buyer agree in writing to extend the contract beyond that date.

Sometimes factors and events intervene that are beyond either the seller’s or buyer’s control. The capriciousness of nature, unexpected delays of the lender and/or underwriter in getting the closing package to the closing attorney, scheduling conflicts among the parties, delays in completing repairs, time needed by Buyer to finalize financing arrangements, etc are all examples we have encountered for delays. Please know that as long as the parties continue to go forth in good faith to close the transaction within a reasonable amount of time beyond the contract closing date, the contract remains intact and enforceable.

The Final Walk-Through

On the date of closing we will schedule with you a “walk-through” of the property. This is an important because it confirms the home and property’s condition. When closing occurs, you accept the home in its current condition at that time.

Seller Possession After Closing,
and Buyer Possession Before Closing

Either one of these options has to be agreed to in writing by both Seller and Buyer. The form for the Buyer is “Buyer Possession Before Closing Agreement” and the form for the Seller is “Seller Possession After Closing Agreement.“

These agreements set forth the conditions and financial arrangements for the specified time for possession. Please note that either form cannot be used for possession for more than 7 days. Otherwise, a standard lease agreement will need to be entered into by both parties for their protection. If the occasion arises for either option to be considered or utilized, we will fully review the provisions of the form with you so that you can make a decision as to how or whether you want to enter into the agreement with the Seller.