Anatomy of a Transaction

1. Review of the Sellers Disclosures

By law, sellers must disclose what they know about the property. Oregon is not a ‘buyer-beware’ state; it is a full disclosure state. Sellers who do not disclose all that they know about their property risk a lawsuit for withholding material facts. This can result in financial loss, and in some cases, nullify the sale. We will do everything we can to prevent such a thing. You the buyer must seek to know as much about the property before you close on it. While we are prohibited from performing your due-diligence, we will guide you in yours. We will also keep our trained eyes open for issues. A good inspector is indispensible and your curious and suspicious mind will also assist in preempting issues that could later result in a lawsuit. Buyers have the opportunity to review what the seller has disclosed and negotiate, terminate, or accept the findings. There is usually a 5 day review period once delivered by the listing agent.

2. Review the Preliminary Title Report

As soon as escrow is opened, a ‘snapshot’ of the legal title will be sent to all parties. This will show ownership, all liens, judgments, and encumbrances, easements, tax liabilities, and issues such as Covenants, Conditions, and Restrictions (CC&Rs), etc. The buyer reviews this information and raises any concerns or issues for negotiation or remedy. There is usually a 5 day review period once the title is received from the title company.

3. Inspection Deadline

It is a necessity for buyers to know what exactly what they are purchasing and the current condition of the property.  A professional inspector is hired by the buyer to thoroughly evaluate the home, and a report is given to the buyer for further negotiations, further inspections by specialists (if necessary), or future maintenance consideration. This is also a time for full due-diligence; talk with neighbors, the city or county, Home Owners Association, etc. Once you close on the property, it is too late to do your research (except in a fraudulent circumstance).

4. The Appraisal

The appraisal is a contingency if the property fails to appraise for the agreed-upon price. The buyer may renegotiate, accept the appraisal, or terminate the entire deal.

5. Final Loan Approval

The sale is contingent upon the buyer gaining full loan approval. If the financing fails by no fault of the buyer even up to the closing day(!), the buyer may terminate and retain the earnest money.

6. Closing = Signing, Funding, and Recording

After final loan approval, any final funding conditions must be met. More information may be asked of a buyer, or other administrative tasks may have to be done by the mortgage broker or the escrow company. Loan documents are then sent to escrow where they are printed, formatted, and organized for efficient signing.

Signing usually takes place 2 or 3 days before closing. Both parties sign at the escrow office. For buyers this may take an hour or more because of all the loan documents. The loan documents are returned to the lender for final review of signatures, which can take up to 48 hours. Funding and Recording: When all conditions are met, the lender will release funds, wire transfers will commence, and then the escrow company will record the deed in the county courthouse. At this point the sale is legally complete.

7. Possession

Sometimes possession does not occur at 5pm on the closing date. If negotiated in the offer, the seller may have a few days to move out before the buyer actually takes possession.  Sometimes these days are paid per diem in advance by the seller; sometimes it is a courtesy given to the seller by the buyer.

Published on: Dec 13, 2012