The 3 Contingencies You Need to Know About During Escrow

There are three basic contingencies implemented within the escrow period: the home inspection contingency, the appraisal contingency, and the loan contingency removal.

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During a home sale, there are three basic contingencies implemented within the escrow period that you need to know about.

The first is the home inspection contingency. This contingency period allows the buyer to do all of their investigations (home inspection, roof inspection, pest inspection, etc.) as well as review all of the documents and disclosures that the seller has provided them, which they are required to do in California within seven days of accepting the contract. This also gives the buyer time to do their due diligence and feel comfortable that they’re getting the property they first wrote the offer for.

This contingency period normally lasts about 17 days. It can be shortened, though. We normally ask the buyer to reduce the timeline to 12 days because it doesn’t take that long to go through all the paperwork and do all the inspections.

The second contingency is the appraisal contingency. The lender plays a big role in this contingency. When they know that they’re doing a loan on a property, they hire a third-party appraiser to go out and do a valuation on the house to make sure that the offer the buyer wrote for it is actually worth that much money. This way, the bank can feel comfortable and confident when making their loan.

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These contingencies help move the transaction along.

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Sometimes, an appraiser appraises a home for lower than what the contract price is. At this point, more negotiations ensue. Let’s say, for example, that you got a contract at $400,000, but the appraiser appraises the home at $390,000. The buyer can pay cash to close the $10,000 difference, the seller can reduce the price from $400,000 to $390,000, or both sides can meet somewhere in the middle. If the home is priced correctly the first time, however, it should meet the appraisal price. The appraisal contingency lasts about 17 days as well.

The third contingency is the loan contingency removal. This just means that the lender has gotten all the documents they need from the buyer (bank statements, taxes, W-2s, etc.) and they are confident enough in them to release that loan contingency. Normally, this loan contingency happens 21 days after the acceptance of the contract.

These three contingencies exist to make sure the buyer is doing what they need to do to move the ball forward. As always, if there’s a problem, we solve it by negotiating.

If you have any questions or have a topic in mind you’d like to learn more about, please feel free to reach out to me. I’d be happy to help!

5 Keys to Position Your Home Sale for Success

Positioning your home from a marketing perspective is the best way to sell for top dollar. These five things are the keys to positioning your home to maximize your exposure.

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When you sell your home, it's important to position it well from a marketing perspective if you want to get top dollar and sell as quickly as possible. There are five main points to focus on to do this:

1. Pricing. You want to price it as close to fair market value as possible because this will give you maximum exposure from all qualified buyers in the market. Pricing too high, like many sellers tend to do, will give you less traction and less access to qualified buyers. You want to try to get multiple buyers who want to write an offer on your house.
2. Bring in a staging consultant to see if there's anything that needs to be done to the property. When you went on your first date with your spouse or partner, you spent some time to look sharp and get ready to impress them—we want to do the same thing with your house. How you live in a home is not how you sell a home. Some of my clients have simply removed some furniture and excess clutter while others have spent $5,000 staging the home professionally. Each home has different needs.
3. Use professional photography, videography, and maybe even drone video. These days, 97% of buyers will actually start their search for a home online. If your home isn't positioned well visually on the Internet and buyers aren't drawn to the pictures, they probably won't see it in person. Photos are the number one thing we have to do to be sure your home shows well online to all those buyers.
4. Market syndication. This means your listing is pushed out not just to one website, but to hundreds or even thousands of real estate websites. There are many buyers who could come from many places, so you want to put your home in front of as many qualified buyers as possible on a myriad of real estate websites.
5. Make sure you have the back end operations to capture all that lead data. You want to be sure the agent and team you hire have the operations in place to make sure they're converting on the activity your home is seeing from the marketing; it should be proactive, not passive.

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You want to expose your home to as many qualified buyers as possible.

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With these five keys in place, you'll be in the best position to sell your home quickly for top dollar. If you have any other questions, always feel free to give me a call or send me an email. I'd be happy to help!

Don't Skip These 5 Inspections When Buying

If you're buying a home, we recommend investing in five different inspections to get a better idea of the condition of the home you’re buying.

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Home inspections are a vital part of any real estate transaction. Which ones should you get and how much do they cost? These are the top five inspections we recommend when buying a home:

1. Home inspection. This one is obvious; the home inspection will make the overall condition of the property clear. There is no specialty for things like heating and air, but they can identify problems that will need further investigation from someone like a plumber or electrician. It's a general overview, and it's great because you can do a general walkthrough following the two-hour inspection period. This will help you understand any concerns the inspector may have. These home inspections generally cost between $400 and $450, depending on things like your foundation and crawlspace.
2. Pest inspection. This not only checks for actual termite activity, but also dry rot and fungus. These issues, if not addressed immediately, can only get worse. Pest inspections usually run about $100.
3. Roof inspection. This will tell you if there is any part of the roof that needs maintenance or repair, and what the costs would be in order to get a roof certification. Roof certifications normally cost about $250, and there could be some items that need to be corrected in order to get it. The report for the roof inspection is actually free, so there is a lot of value there.
4. Chimney inspection. You just don't know the condition of a chimney, and yet, there could be a lot of issues going on. For $150, you can have a specialist come out for a cleaning, and they'll also inspect the condition of the chimney and the flue and make sure it's all functioning properly and is safe to use. You don't want to start any fires in an unsafe chimney.
5. Sewer line inspection. Not everybody gets this, but it's only $100 and they actually run a camera through the sewer line. Our inspectors have found multiple instances of issues with sewer lines that could have cost up to $6,000. We have been able to correct these issues or get a credit from the seller to fix them simply because most people wouldn't do it.

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These inspections are well worth the investment.

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These are the top five inspections we recommend, but there may be more special inspections depending on the type of property. These inspections are all well worth the investment on a property that's $250,000, $500,000 or more, just so you know what you're buying and that things are working properly, and if they're not, we will ask the seller to take care of them before the close of escrow.

If you have any questions about inspections or about the Sacramento real estate market, give me a call or send me an email. Let's talk soon!