After inspections, the next step in the process will be to have your lender schedule an appraisal. Again, this is not required for cash buyers, but is strongly suggested to best understand the value of the home being purchased. A lender may try to schedule the appraisal prior to receiving and agreeing to any inspection contingencies, however unless there is a time constraint it would be prudent to schedule the appraisal chronologically after the inspection. You should expect to spend $400-$500 on the appraisal which would be unnecessary if the deal was falling through due to the inspection results.
The appraiser is supposed to be a “blind” 3 rd party to the transaction in that the listing and buyer agents and all involved with the process should not communicate nor attempt to influence the appraiser or the process. With that said, it is not uncommon for the seller to have a CMA in clear sight at the time of the on-site appraisal.
You should be aware that FHA appraisers will do their own inspection as it relates to the required conditions of the home for their loan products. This may require additional negotiation with the seller, or contingent loan modification, with respect to making these additional repairs. The repairs must be completed before closing unless there is a home modification (usually 203k) plan in place. FHA will file the appraisal and inspection results into an accessible database for 180 days. Any additional FHA appraisals will access this database prior to performing the appraisal.
-Depending on the type of home and location, inspections criteria & elevation certificates may be required. The buyer is responsible for procuring insurance and communicating all requirements necessary to bind the policy prior to closing.
-The seller usually pays for the title search. This ensures that the seller has cleared all liens, permits and other financial obligations. It insures that the seller(s) are the only principle to the sale and that after the transaction takes place that the buyer(s) will have sole ownership of the home. A survey of the home will be required to document the boundaries and any infringements of the property. If the seller has had a survey done within the last 10 years, the buyer can usually use that one. If not, the buyer could expect to spend approximately $400 for a new survey.
-Once the lender has completed the underwriting process they will communicate a “clear to close” to all participants. It is essential that the buyer not make any modifications to their financing, cash on hand or credit after this point because any changes will re-initiate the underwriting process and probably delay the closing. The buyer will also receive a Closing Distribution from the bank 72 hours prior to the actual closing. This document breaks down all of the costs associate with the sale and identifies how much and how to wire the balance of the funds necessary to complete the sale. The buyer also has an opportunity to re-inspect the home 24 hours before the close to assure all agreed upon appliances and fixtures are present and that no major modifications have occurred since the initial inspection. Lastly the buyer can either show up at the title company and complete the transaction, or if not convenient, can set up a “mail away” closing to be performed in a remote location.