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From Contract to Closing – 10 Steps of Buying a Condo

The steps below outline the condominium purchase process, from your initial contract to your closing:

  1. LOAN APPLICATION
    Before you even make an offer on the condo, you should run a credit check and contact your lender to see how much money you will be approved for when you get a mortgage loan. If you’re not sure where to find a reputable lender, ask you real estate agent for a referral. You will need to provide the lender with all pertinent financial information, including your assets, income, debts and credit history. Provide the listing agent with your loan application so you can begin the process of negotiations with sellers.
  2. CONDO INSPECTION AND REPAIRS
    Over the years, condo inspections have become more important than ever. Your home (condo) inspector will do a thorough inspection of the entire property, from the landscaping to the electrical and plumbing of the condo. The buyer will hire, and pay for the condo inspector. After the buyers have reviewed the inspection report, the seller must repair any damages in and around the condominium. This falls under the due diligence period, which is part of the purchase and sales agreement.
  3. DUE DILIGENCE
    This is the time in which the seller allows the buyer the option of walking away from the agreement for any reason. The buyer can inspect the property even further to inspect for any additional problems not addressed in the condo inspection. For instance, many buyers will have a professional termite inspection done on the condo at this time. A full renegotiation may occur during the due diligence process – whereby the listing and sales agents are critical to the successful negotiation.
  4. APPRAISAL
    The lender will always require that the property be appraised to ensure the value of the property is close to the negotiated purchases price, to justify the loan. While the price has already been negotiated, financing can fall thru if the appraisal returns a value the lender is unsatisfied with.
  5. LOAN APPROVAL
    If the lender is satisfied with the appraisal value, and the buyer has been approved for the loan, the mortgage lender will make the final approval. Both agents will work hard to ensure this outcome is reached as quickly as possible.
  6. CLOSING
    Once the loan has been approved, a real estate attorney will prepare the closing documents. The attorney will typically be chosen by the lender and he/she will check the title of the property, prepare all paperwork and be responsible for the distribution of all financial transactions.
  7. TERMITE INSPECTION
    The seller will typically provide a termite inspection report to the buyer. A licensed termite inspector will need to confirm the property is void of any infestation before signing off on the report. If any evidence of termites is discovered, treatment and repair must be conducted according to the terms of the contract. The cost of the inspection is typically the responsibility of the buyer.
  8. CONDOMINIUM INSURANCE
    Any time there is a mortgage taken out on the condo, the buyer must have adequate condo insurance coverage. The selling agent will help the buyer find proper coverage to satisfy the terms of the lender. A policy must be created before the closing process can occur.
  9. FINAL INSPECTION OF REPAIRS
    If the seller agreed to perform any repairs on the condo, the buyer will need to re-inspect the condo at this time to ensure the work has been completed to their satisfaction.
  10. UTILITIES TRANSFER
    Before the final closing documents are signed, the seller must transfer all utilities over to the buyer. This will typically take place on the date of possession, which is outlined in the terms of the agreement. The seller will notify all utility companies to cancel services on that day and it is the responsibility of the buyer to ensure they contact the same companies to transfer services on the same day.

 

Now that you know how the condo buying process works, find out what happens after closing on a condo.

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