Buying Real Estate – Common Closing Conditions
A closing condition is a requirement each party involved must satisfy. Typically found between the first offer and the closing date. As such, most purchases are not closed when everyone signs the Purchase Agreement. As a result, there are still some tasks left to do before finalizing the purchase. These tasks are called closing conditions. Today Joe is going to discuss three of the most common closing conditions in a real estate agreement. Click here to see Joe’s Fiduciary Friday on The Offer Process.
Most real estate offers are conditional on the buyer obtaining the necessary financing to complete the purchase. This condition is typically for a period of three to seven days. It give buyers the time to confirm with their mortgage broker or lender that they are approved for the necessary funds.
Upon receiving this approval, the buyer then waives the condition in the offer and the agreement becomes “firm.” The buyer may be unable to obtain the financing approval. The buyers will then notifiy the sellers and the agreement is terminated. This can be avoided, however. It is recommended to get a mortgage pre-approval. See Joe’s Fiduciary Friday about How To Arm Yourself To Buy A Home
The Home Inspection
A home inspection clause is inserted into the offer to protect the buyer. It will be the buyers responsibility to arrange and pay for a home inspection. After the home inspection has been completed, the buyers will be notified of the results. Therefore, based on the findings of the home inspector, the buyers can choose to move forward with the purchase of the home. Consequently, they can also choose to back out of the deal.
Insurance companies sometimes require additional information. They can be concerned with things such as electrical wiring, fireplaces and wood-stoves. Buyers need to make sure the home will be insurable. As a result, if you may not be able to insure it. The bank can refuse to advance the funds necessary to close your real estate sale contract. With most homes, especially newer ones, this is not normally an issue.
There Are Other Conditions
In conclusion, above Joe listed the 3 most common closing conditions in an offer. There are probably hundreds of conditions that can be inserted into an offer. Some can be specific to the property you are trying to purchase. They can get into great detail, especially when it comes to commercial properties most of all.
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