Buying a home comes with a lot of confusing steps that often intimidate new buyers. If this is your first time going through the home buying process, you might be concerned about escrow. The good news is that this is the home stretch of the process, and your home is closer than you think.
It feels like forever when you’re waiting for the keys to your new property, but the time will fly faster than you think. This article will define the escrow process so you know what to expect when buying a home.
What is Escrow?
In the world of home buying, escrow is the holding area where the money and contracts are secured until your home is closed. Before the title to your home is physically in your hands, it’s kept with an escrow officer. This officer is a third-party, and they’re usually from the closing company or title company (some states require this to be an attorney).
You’re probably asking why a third-party needs to be involved at all in your home buying process. Simply, it’s for the protection of the buyer and the seller. They make sure everything goes smoothly during the closing process. They protect things like your money and your contracts until it’s time to finish the process completely.
All of your documents will be filed with the escrow officer while you handle your closing. This might include things like home inspections or repairs that need to be done by either party. Finally, when all the conditions for selling are met, the money is transferred to the seller while the records or title is given to the buyer.
Why Escrow Protects Buyers and Sellers
While it might sound like a pain when you’re in the moment, escrow actually servers both the buyer and seller in a big way. The buyer benefits from the escrow by being able to make sure contingencies are met before their money is transferred to the seller. For instance, if the seller agreed to fix a problem with the plumbing, escrow will ensure these funds aren’t transferred until those repairs are complete.
It’s not just the buyer that benefits from the escrow process. Sellers also have the added peace of mind of knowing there’s a security deposit in case the buyer backs out at the last minute. This can be anywhere from 1-2% of the cost of the home which is held in escrow. If the buyer backs out without any real reason, this deposit is then given to the seller for the failure of the sale.
Think of the escrow process as a way to make sure the home sale is done correctly and with consideration for both parties. It also includes a third party who is able to check all documents, contracts and funds are secure and dealt with properly the first time.
Yes, it’s frustrating as both the buyer and the seller to wait for the completion of the escrow process. It’s time-consuming and costly, but it’s also a necessary part of buying a home. It’s there for the protection of both the current homeowner and the new one. It doesn’t affect your home buying process in any way except by making it more secure and reliable for everyone involved.
Have you ever thought about your house potentially violating any codes? You may have recently replaced an air conditioning unit, added a backyard deck, etc. It may be possible that the new additions to your home may be in violation of building codes or HOA in your town, city, or county. Although it may not be something you have thought about before, selling your house with code violations can be more problematic than you think.
Is Your House Is Up to Code?
To determine this, unfortunately most city municipalities have a set of building codes that you have to abide by. These codes they use are to help with safety and help prevent damage or health issues. This is ultimately a way to look out for occupants of homes, apartments buildings, and any other residence. Theses specific rules however, vary depending on the municipality, structure, and type of work done.
If you own a new home, there’s a good chance that it is already up to code. New home builders often have local inspectors watching over them and making sure the work they’re doing meets the codes of the city, county, etc. As you alter, change, or add on to the residence the code violations might be coming with that. That could be a problem if and when it comes to selling your home. So, in case you are wondering if and how you can sell your home with all of these issues, there are a few solutions to prevent this before selling your home.
Bring Your House Up to Code
The best way to make sure that your house is up to date with code violations is to hire a general inspector to take a look at your house and see any potential code violations, if you have any.Most times, inspectors aren’t looking specifically for code violations but they will look for any hazardous electrical wires, piping leaks, and anything else that may turn into a problem. The truth is that it’s unlikely anyone can keep you from selling a house with certain code violations.Most mortgage companies will have an inspector take a look and if they see too many code violations they may not want to loan on the house.
Sell the Home with Violations with Value Cash Offers
Technically, you could sell the home as-is on the open market as long as there are no clear code violations that presents any danger to the home. If you decide to sell the home as-is with any potential code violates the buyer will take on that responsibility.
The buyer is going to want contingencies and credits for the work they know they’ll have to do and that’s coming directly out of the sale price. To avoid the headache with negotiations going back and forth with the seller, you can call us here at Value Cash Offers and we will help you sell your home!