Inspections & Appraisals

The Process

Initial Agreement and Deposit

An executed purchase agreement is a legal arrangement between the buyer and the seller. A few things to keep in mind as you move through this stage:

• Keep written records of everything, including verbal agreements, counter-offers, and addendums. We will assist in drafting all written documentation and ensure each party receives their copy.
• Stay on schedule. Both you and the seller will be working against a defined timeline to complete each stage of the closing process.

The Closing Agent

Once both parties have signed the contract, a title company or attorney will serve as the escrow or closing agent, and you will submit your deposit. Escrow functions as a neutral third party, holding and distributing all funds related to the transaction until the closing date. They will research the full history of the property to confirm that the title is clear of encumbrances by closing and that any new encumbrances are recorded correctly. All contingencies outlined in the Purchase Agreement must be satisfied before escrow can close and the property can officially change hands.

How to Hold Title

There are several ways to hold title or legal ownership of a property, and each carries different implications for ownership transfer, financing, taxation, and estate planning. We recommend discussing these options with a qualified attorney or tax advisor before making a decision. We are happy to connect you with trusted professionals in those fields.

As part of the Purchase Agreement contingencies, you will arrange for a licensed inspector to evaluate the property within the agreed upon timeframe. Inspectors will assess the property's condition and identify any concerns. You may choose to bring in specialists for specific systems such as roofing or plumbing. For commercial properties, an environmental audit or soil test may be required by the lending institution. If inspections surface issues not previously disclosed, you have the right to request a renegotiation of the contract terms. Once you are satisfied with the inspection results and the terms of the agreement, contingencies will be removed.

Appraisals and Lending

Stay in regular contact with your lender throughout this stage so you are never caught off guard by a document request. If the Purchase Agreement is contingent on financing, the lender will require a third-party appraisal to confirm that the property's value supports the investment. Appraisers evaluate a range of factors including building costs, square footage, operating income, and comparable sales. Check in with your lender approximately two weeks before closing to confirm everything is on track for timely loan approval.

Association Approval

If the property requires approval from a homeowners or condominium association, request all relevant rules, regulations, and required documentation from the seller as early as possible. The Purchase Agreement will establish a timeline for submitting any paperwork or completing any required appointments. Once approved, your closing agent will request the original approval letter so it can be recorded with the deed at the county level during closing.

Property Insurance

Standard property insurance covers damage from events such as fire, theft, and certain weather conditions. While most states do not legally require coverage, the vast majority of mortgage lenders do. If you plan to occupy the property, you will need homeowners insurance. If you intend to rent it out as an investment, landlord insurance is the appropriate policy type. We can help you think through those options as part of our broader investment guidance.