#1. Open an Escrow
The first step to closing the deal and unlocking the front door of your own house is to open an escrow. An escrow is a contractual arrangement in which a third party receives and disburses money or documents for the primary transacting parties, with the disbursement dependent on conditions agreed to by the transacting parties. Escrow, on average, will last approximately one month. During that time, the third party is taking care of transactions on both the seller and buyer’s behalf. For example, if you’re providing an inspection as a buyer, you deposit funds to the escrow account. Costs of this service are to be negotiated beforehand. Be conscious of the escrow company’s fees. Some contain unexpected fees you might only become aware of during payments, because they’re hidden. Understand escrow company fees before entering into an agreement.
#2. Conduct a Home Appraisal
A home appraisal determines the estimated market value of your soon-to-be property. The appraiser evaluates it based on general condition, geographic location, proximity to objects of interest, value of the nearby houses, recent sales, and neighborhood growth and potential, among other factors. Mortgage lenders require this information to make sure the amount you borrow is supported by the home’s value. There’s always a risk of a low appraisal. In that case, the lender won’t go through with the transaction at that price or will ask you to add more money to the down payment to qualify for the loan. The seller might adjust the sale price accordingly, but also might not. Appraisal value isn’t a binding figure — what the seller sells for and the buyer pays determines the sale price. The situation might be that you negotiated a deal with the seller for a price already lower than initially wanted. This is due to the home
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