Buying a home in Big Bear
Understanding the process
This document assumes that all of the searching for the right home is done, and you are now ready to submit the offer to purchase. What are the steps between the writing the Offer, and getting the new set of keys?
- Preparing the Offer. I’ll prepare the computerized offer (Residential Purchase Agreement) with input from you. Together we’ll need to decide on the following items:
i. What price will you offer to the seller?
ii. The desired length of escrow…45 day is pretty typical… this won’t be a firm date, but an “estimated date” for the close of escrow… can vary by a few days.
iii. Any other special terms (furnishings, distribution of costs, etc)
iv. The amount of your Earnest Money check
1. A copy of your check is submitted in the same package as the Purchase Agreement. Generally $2,000 to $4,000 depending on the purchase price, but always less than 3% of purchase price.
2. This money will be credited towards your closing costs as well. A typical $300k home will have closing costs of about $3,000, so the earnest money check will usually cover your portion of the closing costs.
v. Financing: the amount of your down payment.
1. All cash offer? Will need “proof of funds” statement from bank or credit union or stocks portfolio.
2. Working with your Lender, you need to tell me how much down payment you intend to provide, and what the term of the mortgage will be.Getting escrow started… remember that Escrow is defined as: “30 days of boredom, ending with 3 days of panic”. As soon as you and the seller finally agree on the price and other terms, I will submit the Purchase Offer, the deposit check, and either proof of funds, or a pre-approval letter from your Lender to the selected Escrow office… and so begins Escrow.
The 30 days of Escrow…
From time to time you’ll receive, either in hard copy or as electronic attachments, documents and requests for information that the escrow officer will need. Pay very close attention to these requests, and respond as quickly and completely as possible. Delays in your response have a direct effect on the closing of escrow.
Although you’ve responded to all requests from Escrow and your Lender, there are usually one or two items (sometimes very small issues) that will bring the process to a halt unless fixed immediately…something as small as a driver’s license number, or title for a car that you sold several years ago. There is usually no way to cover all the bases, so my best advice to you is to stay nimble and ready to react to anything. Even something like a missing $20.00 Carbon Monoxide detector can disrupt the process.
Escrow will be in touch with your Lender early in the escrow process (unless this is an all cash transaction). Escrow and the Lender will be exchanging documents until the final hours of the transaction. Again, please be as responsive as you can to their requests… these last couple of days will be the “panic” days that I described earlier.
- The Final days… Funding and Recording… here is where the “panic” sets in… but don’t worry… My job is to manage the panic so the transaction won’t stall.
“The Closing”... On the U.S. East coast, “the Closing” is a very formal meeting with attorneys present from both sides along with the Lender rep and sometimes attorneys from both real estate agents. However, in California, we don’t have a formal meeting as such… usually present will be the Escrow officer, the Buyers, and the Buyer’s agent. Although your legal council is always invited, we generally don’t have attorneys present… the reason is that the California Purchase Agreement, as well as the Escrow Instructions, are written in non-legal terms and have all been tested in the California courts. By the way, we can’t change the printed documents at all, but we can write addendums to the standard terms and conditions when necessary.
Loan Documents. Before the Funding can happen, you’ll meet with the Escrow officer to sign the “Loan Documents”… these docs are the actual loan and escrow documents that have been transmitted from the Lender to the Escrow officer on the final day. You do need to physically be there since several documents have to be notarized. Usually the Escrow officer is also a Notary Public so you won’t have to dash around to find one.
“Wet Ink”. After the loan docs are signed, the Escrow officer will use FedEx or UPS to send the docs back to the Lender… these docs must be the “wet ink” originals and can’t be copies or scanned-in versions. The overnight delivery back to the Lender can be delayed by a weekend or holiday.
Funding. The term “Funding” refers to the actual transfer of closing funds from your Lender to the Title/Escrow company… this is usually accomplished as a “wire transfer” from the Lender. In the case of a Cash offer, you will have instructed your bank/financial institution to “wire” the closing funds to the Title/Escrow company. Those wiring instructions will be part of the info that comes from the Escrow company. When the Title/Escrow company has received and logged the wired money, then the transaction is “funded”.
Recording. The process that immediately follows “funding” is “Recording”. There is usually anywhere from a 2 to 24 hour delay before the deed is officially “recorded”. Most Escrow companies can do a “special recording” if the situation warrants… this means that Funding and Recording may be on the same day. But most likely Recording will be the day following Funding. The term “recording” actually means that the San Bernardino County Clerk puts a stamp on the Deed. The action of stamping (with an actual rubber stamp) means that the transaction is “recorded” and that recording formally closes the transaction… and that is when the home becomes yours.
New Keys. Immediately after the deed is recorded, Escrow will call me with the happy news that “it is recorded”. That’s when I get to call you and let you know that the home is officially yours… and then we’ll set up a time to give you the keys.