INCLINE VILLAGE, Nev. — With interest rates near historic lows resulting in a large number of people continuing to do refinancing and sales activity moving along at a better pace than a couple of years ago, buyers will want to pay careful attention to establishing reasonable time frames when writing an offer this year. The Incline Village Board of Realtors purchase agreement provides for a number of contingencies during the escrow period. It behooves buyers and their agents to group contingency deadlines together so that the escrow process is easier to manage and you don't have a deadline coming due every couple of days.Normally, contingency removal dates are based on the number of days after acceptance. But, occasionally there may be a provision in the contract or addendum that will talk about a contingency deadline being based on the number of days from acceptance. While this creates a difference of only one day, the buyer would not want to accidentally be in breach of contract and risk termination by the seller because they miss a deadline due to the confusion over a definition in the contract.Most lenders are currently taking between 25 days and 35 days to get a loan approved. While in rare instances you might be able to get a loan approved and documents drawn up more quickly, relatively high levels of refinancing activity are keeping lenders desks piled up with paperwork. This also means that appraisers are starting to get a little bit busier and you can't expect them to show up at a moments notice to appraise the property you wish to purchase. Setting the appraisal contingency removal somewhere between 15 days and 18 days should provide enough time to get this important element of the purchase process completed.Home inspections are a critical part of the due diligence that each buyer performs when purchasing a property. Allow enough time to get the inspections performed, reports written, estimates completed and then a few days to contemplate and analyze the results. Generally speaking all of this can be performed in 14 to 21 days depending on the size and condition of the property, weather and snow conditions and the availability of personnel needed to do the inspection work and estimates.Homeowners insurance is one of the easier contingencies to deal with especially if you are purchasing a condo. Most likely the HOA will provide insurance on the structure and common areas and the coverage you are purchasing will cover the contents and maybe inside liability. If you are buying a house, especially an older home with a shake roof, purchasing insurance could be a bit more of a challenge and take longer to get the coverage you desire. Condo buyers can generally remove the insurance contingency within 8 to 10 days after acceptance, single-family home buyers might wish to have a little longer contingency timeframe on the order of 15 to 18 days.Some items for which the title and escrow company will be taking primary responsibility include providing a preliminary title report, escrow instructions, and Homeowners Association documents such as CCandamp;Rs, financial statements, Board of Directors minutes, etc. While the title companies do their best to provide all of these documents as expeditiously as possible, condo buyers are very often at the mercy of the HOA or their management firm to get the needed materials. Rushing this process usually ends up with the need to write an extension. I recommend that you allow at least 8 days to acquire, review and approve (or disapprove), escrow documents and extend this timeframe to 15 days if you are requesting documents from a Homeowners Association.As a general rule of thumb, buyers who are paying all cash can shorten the contingency removal periods because you will not have to deal with a lender and all of their time-consuming requirements. It’s possible to close escrow in as little as 5 to 10 days if everyone has their ducks lined up on an all cash transaction. For purchases involving a loan, it is better to establish a 30 to 45 day escrow period so that you are not continually asking for extensions from the seller.Buyers can write offers in a way that group contingency removals for a 30 day escrow so that deadlines fall on days 8, 15, and 21 (with loan approval possibly getting a 25 day deadline). This way you only have to worry about contingency removals once a week and have plenty of time to plan for writing an extension on any topic where you do not have all the information necessary to make a decision. It's imperative that buyers, sellers and their agents stay in constant communication throughout the escrow process to keep things running smoothly and to avoid missed deadlines. Every escrow will have some type of issue or problems that need to be dealt with.So, having a well-established timeline where the contingency removals are handled in an organized and coherent manner will keep everyone on the same page and the transaction flowing smoothly.— Don Kanare is a Realtor at RE/MAX Premier Properties. Read his blog and weekly stats on his website at www.InsideIncline.com.
April 2, 2012 | Back to: News