Streamlining your Escrow and Title Insurance Experience


10 STEPS TO AN EFFICIENT ESCROW, TITLE INSURANCE AND CLOSING!

  1. Ownership and Taxation – are key things to know prior to going into escrow.

 Be informed and consult your CPA and Real Estate Attorney.

  1. Gather the necessary information needed to open the escrow:
For Buyer(s) and Sellers(s):
  • Your full names
  • The way you will take title
  • Your correct mailing address and contact information
  • Email and phone numbers for all parties in the transaction
For Sellers:
  • The last title report when you purchased the property may be very helpful and save you $$ if you use the same Title Company again
  • A complete, fully signed purchase contract with all the buyer’s and seller’s signatures
  • Copy of any Well registration or Irrigation water rights
  • Copy of sanitation permits of record
If you have acquired the property from an Estate:
  • Copies of the documents that gave you the right to sell- Death Certificate of the deceased.
If you plan to acquire the property in a Trust or an LLC:
  • Copies of documents that give you the right to sign for the entity.

If you will close escrow prior to the time the entity is complete, then you will need to negotiate a hold over for title insurance of the new entity when it is complete.  Understand that if you change the deed, the title insurance you have will no longer be good if you do not negotiate for insurance on the new entity. 

Ask up front for all the Preliminary Title Report exceptions not insured and copies of the documents.  If they are easements and the like if they can show where they are on a map would be great.

  1. Define the critical time lines of your escrow.
  1. Know how long you have to do things timely – this is key.
Opening of Escrow Date and Fully Signed Contract Date starts your feasibility inspection period. 

Inspection Feasibility Period – It is important to know what things you want to inspect and knowand timely set up the folks you want to inspect, certify, review the property you are about to purchase, home inspectors, surveyors, home warranty plans, insurance you are taking out, flood insurance if applicable, inspection of permits, preliminary title reports, deed restrictions, utilities to serve the property, soil tests, and the like.  It is a good idea to go over the Buyers Advisory and or Sellers Advisory and early on lay out what you want to make sure of.  Give enough time on the Inspection Feasibility period to be able to accomplish what you want to do and get the results back for review prior to the end of this period.

When your preliminary title report comes in – read it thoroughly and ask any questions.  Make sure of your legal insurable access and items on Schedule B that they make exception to not insured, but rather what your property is subject to.

  1. If you are applying for a Loan – go through the pre-qualification process and obtain preliminary approval prior to going into escrow

You should already have a preliminary loan approval prior to completing the purchase contract.  Work closely with your lender to provide ALL the necessary paper work they will need to get you qualified in underwriting to purchase the property.  This is vital to a smooth transaction. Pick a lender you feel confident in that will make the process easier and be timely with the process and communicate timely with you.  Check them out to see what they have done in the past with other customers as yourself.  Ask for a GSE right away, telling you what your loan costs are going to be up front and your monthly payment. . .

Escrow imageWithin 5 days of a fully signed contract your lender should provide an LSU – Loan Status Update with more information completed to move forward to submitting the loan in underwriting for you.  This LSU needs to be submitted to the seller’s agent for the seller.

  1. Complete all your inspections, research & read your preliminary title report fully prior to the End of your feasibility period.

 You must notify in writing any things you object to – to your Real Estate Agent and or the Seller.  And give them an opportunity to respond and fix or negotiate these items till all minds are clear.

Just as soon as the Buyers Inspection and Sellers Response is completed and there is as meeting of the minds.

  1. The appraisal needs to be ordered right away if there is going to be a loan

 With an appraisal needed, notify your lender up front to let them know when this will be completed a week prior to completion is a great idea because it usually takes them several days from the time they order an appraisal for the appraiser to come out to do the appraisal.

Make sure that any items that are to be fixed have been done timely and you have inspected the results prior to the appraisal.  Many of these things may be required in an appraisal and it is better to get them out of the way ahead of time so the appraiser does not have to come back and re-inspect this will waste time in your escrow timeline.

Once the appraisal comes in, if the property appraises for the sale price then you are good to go and your lender should be ready to submit the entire transaction to underwriting if you have provided everything to them timely.

  1. Underwriting approval

Be prepared to submit more paper work from the underwriter, they will be very thorough in going over all your financial paper work and job history.  Have it all in order ahead of time and do NOT do other financial decision making while in the process of being qualified for a loan – this can cause you to have a new picture that sometimes may disqualify you for the loan you are already qualified for.  Focus of what is at hand and have all your ducks in a row and complete.

Cash Buyer

If you are a cash buyer the process is somewhat easier, you do not need to qualify for a loan however you will need to go through the Feasibility Inspection period and complete all you want to know about during that time period.

Once your feasibility period has ended and you move forward with the transaction usually your earnest money is non-refundable to the seller.  If you are financing residential property then if you loan does not get approved then it may be refundable to you if you have not breached the contract and worked in a timely manner.

Once you loan is approved, be available to sign the loan closing documents timely and give instructions of where you will be.  If out of state communicate with the title company on where you will be and make yourself available timely.

Arrange for your funds to be wired or brought in with a cashier’s check to the title company a day or two before the closing date including your insurance binder on the property.

Ask for your HUD 1 or Closing Statement at that time to go over as soon as it is available and ask about any costs you do not understand – bring out your GSE you got when applying for the loan and go over your closing statement with regard to your loan costs.

Once you sign your final documents if you are applying for a loan the lender will finally approve the documents and once that is completed the transaction will close quickly, title companies record the closing electronically and you will close escrow.

9.   Preparing to close

Be available to do a final walk through the property or inspect the property right before close to make sure everything is in the same condition and you are ready to take possession of the property.

Make arrangements with the utility companies to transfer your services and coordinate with the seller in the transfer or turn off of utilities.

Leave all keys garage door openers and instructions, warranties inside the property so that the buyer can have easy access to them.   Make arrangements to get a key to get in at closing day.  Make arrangements with the utility companies to transfer your services and coordinate with the seller in the transfer or turn off of utilities.  Call your insurance company of the changes

  1. Closing Day

The closing date should be thought out in the beginning giving you enough time to go through your feasibility inspection period, and your lender enough time to process the loan to closing.  Vital things that make an escrow smooth.  The closing date is an exciting date for you the buyer, the seller and your Realtor.  It should be a fun exciting experience and you will experience the ownership of a new property.  Make arrangements to get a key to get in at closing day.

Have a happy closing day!

ET                                                                                                                                                    

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