Inland Empire Income Properties Purchase Procedures



Inland Empire Income Properties Purchase Procedures Residential Income Property Financial Preparation: First and foremost, it is important that any potential Buyer meet with an experienced lender to determine 1) what specific financing programs may be available and 2) obtain a letter of loan preapproval. This must be done prior to submitting an offer, as all Sellers will require a prospective Buyer to be financially qualified and pre-approved before they will entertain an offer and allow the property to opened up for inspection. Verification of down payment funds and FICO scores may also be required. Once a property has been identified by a Buyer who wishes to make an offer, the typical sequence of events is as follows: Submit Offer: A formal purchase contract is prepared and submitted “subject to interior inspection” by the Buyer. The offer must be accompanied by the Buyer’s pre-approval letter and a good faith deposit, typically no less than 1% of the purchase price. (the higher the better!) A proposal accompanied by an aggressive deposit is generally perceived to be a stronger offer from the Seller’s perspective. Preliminary Walk-through: If the Seller accepts the initial offer as submitted, or a counter-offer is subsequently agreed to by both parties, a preliminary walk-through of the property is scheduled. If the Buyer is satisfied with this initial inspection, the process continues. If the Buyer is not satisfied for any reason, the offer may be withdrawn and the Buyer is under no further obligation to proceed. Typically, to not disrupt tenancy, an offer is accepted and inspection takes place during the Due Diligence period. Escrow Opens: Assuming a satisfactory walk-through by the Buyer, escrow is officially opened, the Buyer’s deposit check is submitted to the escrow company, and a preliminary title report is ordered. Due Diligence Period 1) Disclosures / Rent Roll: Within ten (10) days, the Seller must provide the Buyer with all relevant financial statements, rental agreements, and estoppel certificates signed by the tenants. The Buyer will also receive a Transfer Disclosure Statement from the Seller, as well as many other “disclosures” legally required by the State of California for proper transfer of ownership. 2) Buyer’s Inspections: Within seventeen (17) days, the Buyer must complete all inquiries, inspections, and appraisals stipulated in the contract. Of key importance is the prompt scheduling of a comprehensive property inspection to be completed by a licensed Home Inspection Company. (Buyer pays) Buyer reviews inspection report and submits a written request to the Seller’s agent for any repairs deemed necessary. (Seller has option to agree or not agree to pay for any repairs) Termite Report / Clearance: Seller schedules and pays for a professional Termite inspection, completes agreed upon “Section 1” repairs (i.e., existing infestation & damage), and provides a copy of the final written termite clearance report to both the Buyer and the escrow company. Property Appraisal: As part of the loan approval and underwriting process, the Buyer’s lender orders a formal appraisal of the property to be performed by a qualified licensed appraiser. (Buyer pays) Loan Approval / Follow-up: Buyer and Buyer’s agent continue to follow up with loan officer to insure that the lender has all paperwork necessary to process the loan. Lender may request additional information from the Buyer in order to satisfy approval conditions required by underwriting. Final loan approval is obtained and formal loan documents are prepared for escrow. Loan Documents Delivered / Signed: Loan documents are sent to escrow for execution. Escrow will schedule an appointment with the Buyer to sign all appropriate loan documents and disclosures. Final Walk-through: Within five (5) days of closing, the Buyer is entitled to conduct a final walk-through of the property, verifying that all agreed upon repairs were completed and that the condition of property is as originally noted. Funding / Recording: Buyer and/or lender transmits remaining balance of down payment funds necessary to complete the loan process. The loan “funds” and the county subsequently “records” the Buyer as the new legal owner. This also signals the official close of escrow. Contact Tenants / Notify HUD: New owner immediately informs tenants in writing that ownership of the property has changed. Emergency contact phone numbers should be provided, along with the mailing address for submission of rent checks. If the property houses Section 8 tenants, HUD must be notified with proof that the Buyer is now the new owner. Change Utilities: New owner follows up to insure that all common area utilities and property services are properly transferred to his/her name. Post Close Support: Your IEIP representative continues to stay in touch with you after the close of escrow for any ongoing ownership and/or landlord needs. Congratulations!!! Your the proud owner of income property! Advertise Link To Us Link Partners Industry Links Inland Empire Income Properties Copyright © 2001-2007 All Rights Reserved.