Getting To And Through Settlement When Home Buying in Farmington Hills

Once you’ve signed a sales contract with a buyer, many things have to be accomplished before the terms of that contract are fulfilled at the settlement table. Quite a few of these details will be handled by the buyers, their real estate agent and their lender, but you and your agent will certainly be involved along the way. Chances are you’ll have to make your home, and perhaps yourself, available for the appraisal, home inspection and pest inspection.

Settlement Date

An offer to purchase a home typically includes a settlement date. Remember that this is an estimated date for settlement. Many things can crop up to cause delays:

• Problems with the buyer’s credit history that must be explained.
• Delays in processing loan paperwork.
• Delays in the property’s appraisal.
• Inspections and/or repairs that must be completed before settlement.
• Liens against the property that need to be resolved.
• Personal problems (such as a death in the family) that lead to rescheduling.

A settlement delay does not necessarily mean the transaction is falling apart. Many problems can be straightened out in a day or so, and most transactions do go to settlement eventually. The key is to remain flexible and available to deal with any problems that arise.

Inspections

Anything you can do to improve your home’s inspection report is worth handling before the inspection occurs. If you did a good job preparing your home for sale before you put it on the market — tightening door knobs, unsticking windows, fixing leaky faucets — you’re almost all set. Now you just need to go back through your home to make sure nothing else went awry in the interim. Take a few minutes to make sure your furnace has a clean filter and that all light fixtures have working bulbs.Despite your best efforts, a professional inspector may find problems with your home you’ve never been aware of. If your contract says you’re responsible for them, be sure to schedule repairs as quickly as possible so as not to delay settlement. If the buyer has the legal option to walk away after the inspection, you may need to renegotiate the contract at a different price or with different terms.

Survey

Your buyer’s lenders will want your property surveyed to ensure against boundary-line encroachments. For example, if a neighbor’s fence or shed is found to be over your property line, it will be your responsibility to make sure it’s disassembled and moved back to where it belongs. The same holds true if your fence or other structure crosses into a neighbor’s yard.

Moving Out

In many cases, the settlement date is also the occupancy date for the buyer. It’s your responsibility to have your possessions moved out of the house by the occupancy date your sales contract specifies. In addition, most contracts require that the property be cleaned before it is transferred. You’ll have to make arrangement to clean it yourself or have a professional do the job after your possessions have been removed.

Walk-Through

Just before the settlement meeting (perhaps the evening before if the settlement is scheduled early in the morning), your buyer and his or her agent will do a “walk through” of your home to check its condition. During this last-minute inspection, the buyer will look to ensure that all repairs have been made as agreed upon and that no new problems have developed. If the home is supposed to be empty and clean, the buyer will want to ensure that it is.

Settlement

If all goes well, you’ll be relieved to sit down at the settlement table with the buyer and finalize the sale of your home. You’ll have lots of paperwork to sign, which the settlement officer will explain as you go along. This is no time to be sheepish if you have any questions. Once settlement is complete, it is difficult to undo what’s been signed and dated by all parties involved.

If for some reason you are unable to attend the settlement meeting, you’ll need to make arrangements ahead of time, giving Power Of Attorney (POA) to someone who can sign paperwork for you. Often, the seller’s real estate agent is asked to take on this responsibility, but you can designate anyone to represent you. Note that if your spouse’s name is on the deed and mortgage, he or she will need to attend settlement or give POA to you or someone else.

What Happens If Your Sales Contract Fails?

Home-sale contracts don’t always go to settlement. Keeping the security deposit or earnest money that came with the contract (and went to an escrow account) is one way you could be compensated if the contract collapses.

Do you have a right to the earnest money? That depends on how clearly you and the buyer spelled out, in the contract, what would happen with the money if the contract fell through.

If, for instance, the contract fails for lack of financing or due to a pre-agreed-upon home inspection problem, the deposit would normally revert back to the buyer. However, if the buyer was unable to get financing because he sabotaged his creditworthiness (say by purchasing a car just before loan approval), then you might have a right to keep the deposit.

Contracts that fail because a defect in the property is discovered can be costly. The expense and time needed to fix the problem may delay getting the home back on the market. Added to that, you would receive no compensation.