First-Time Buyer Series #8: How To Buy A Home – Completing the Escrow Process

Buying your first home on Oahu can be a very exciting time for any prospective first-time homeowner. My job as a first-time buyer specialist is to make my first-time buyers feel comfortable and confident going through the home process. As first-time buyers, it’s natural to feel a little overwhelmed and nervous, but with the right real estate agent with you along the way, the process will also be fun, educational, and all the worthwhile! 

Getting pass the home inspection is the first major hurdle to overcome. Here’s what to expect next!

Submitting your Additional Deposit

Similar to your initial earnest money deposit that was submitted to escrow after acceptance of your offer, the additional deposit usually gets submitted once the home inspection period has been approved. Like your first deposit, the additional deposit get applied towards your down payment amount. The balance of your down payment will be due upon closing. 

Seller’s Disclosure Review

You may have received the seller’s disclosure prior to your home inspection. The seller’s disclosure is a 5-page legally binding document of questions that must be completed and answered truthfully by the seller. This document should give you the history of the property based on the seller’s knowledge. This may include any defects to the property, repairs or replacements, material facts, and more.

Condo Document Review

If you are purchasing a townhome or condo unit, you should also receive condo documents about the complex. Just as the seller’s disclosure will give you information about the unit itself, the condo documents will give you information about the entire complex. This will include meeting minutes, the house rules, governing documents, a lender’s disclosure, budget report, reserve report, and more.

Termite Inspection

Termites are a common problem in Hawaii. Therefore, it is recommended that a termite inspection take place prior to the purchase of a property. Typically, but not always, the termite inspection is a seller’s expense while the buyer gets to choose the termite inspector. If there is active infestation found in the property, the seller is contratually required to pay for the termite treatment.

Appraisal

If you are purchasing the property with a mortgage loan, your lender will require an appraisal on the property. The appraisal value must meet or exceed the agreed-upon purchase price. If the appraisal value is below the purchase price, the lender cannot approve of the purchase and can only give you a loan up to the appraisal value. If this happens, your agent can try to negotiate the price down with the sellers. Or, the buyers can agree to make up the difference in cash. If neither side can come to an agreement, the purchase can also be cancelled.

Final Walk-Through

Prior to closing, the buyers and their real estate agent will go back to the property to conduct their final walk-through. This is to ensure that the property has remained the same since the initial inspection and that the buyers have approved and are ready to close. If any repairs were negotiated through the home inspection, this is also the buyer’s opportunity to ensure that the repairs were done to their satisfaction.

Escrow Signing

You’re nearly there! In order to officially close on the property, both parties must sign the necessary escrow and lender documents in front of a legal notary. Your real estate agent should also be present with you at this time!

Can you believe it? Your move-in date is near. Read on to First-Time Buyer Series #9: Prior To Moving In for a list of recommended items to take care of before you even get the keys.

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