The Buying Process: Part 3: Disclosures, Inspections, and Title

These are the initial tasks once a buyer is in contract, and are most often done in parallel to the mortgage process:

1. An offer is accepted by the seller and a contract is signed and accepted. Concurrently, a deposit, or earnest money, is paid to an escrow agent, an attorney, or broker (never to the seller directly).

2. The signed contract is sent to a closing attorney or title company to begin preparation of all work related to transferring and changing the title to the new owners and preparing the title commitment.

3. The buyer reviews and signs off on any disclosures. These disclosures vary based on property type but often include things like known flaws with the property, prior improvements or repairs, and potential environmental hazards. A standardized disclosure form called the Maryland Residential Property Disclosure Statement is generally provided by the seller as an addendum to the contract and must be signed by both buyer and seller. Sellers may see making these disclosures as beneficial to themselves, and believe that buyers will build these pre-disclosed facts into the contract price (and thus sellers may be reluctant to provide any credits for these defects).

4. The buyer elects to perform inspections on the property if agreed upon in the contract (in Maryland, there is generally a separate addendum that covers a series of possible inspections). Each of these inspections must be completed by a certain date, which is called an inspection contingency date. The types of inspections vary by property type and situation (and locale), but in Maryland, a home inspector generally inspects the home first, and other inspections and tests can be ordered if revealed to be necessary by the initial inspection. A termite inspection is also often performed in Maryland.

5. Based on the outcome of inspections, buyers may elect to walk away if something material is found. Or, they can ask the seller for repair work, closing cost credits, or a reduction in the sale price due to flaws that were uncovered. Sellers have three options: agree to all of the buyers’ requests, offer a modified solution back to the buyer, or decline to make any amends. In response, the buyer can continue to negotiate, accept the seller’s position, or walk away. All of this, of course, is done in writing.

6. The buyer may also negotiate for a home warranty that covers major appliances from failure for a time period after the sale, typically a year.

Source: Amitree.com/articles/139/maryland-homebuying-and-closing-process