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00 Congrats For Mutual Acceptance

You’re Pending! What happens now?

After all of the activities performed to get into contract, the pending-to-closing process is quite a contrast. We call it the “Hurry up and wait” phase. By the time you read this, we’ve likely already forwarded the contract to the escrow company and lender (if one is involved) and they, along with title, are preparing the files to move forward and complete their responsibilities in time to close on time per the contract’s closing date on page one. They’ll be reaching out to you shortly to ask for authorization to act as your escrow agent and get verifications of identity.

Before we go any further, we encourage you to take a look inside this folder for a number of informative items pertaining to the pending transaction process: https://tinyurl.com/CAFBuyerPending  In it you will find examples of escrow letters and other helpful explanations.

While there has likely been a flurry of activity getting to mutual acceptance, there is one more crucial and critical action to perform, and that is the deposit of your earnest money into escrow immediately after mutual acceptance. That’s especially time-sensitive if there is any agreement to release any portion of that earnest money as non-refundable. Wiring money into escrow accounts involves extra time and steps, because of electronic wire fraud.  Don’t let your guard down in terms of being available to timely facilitate in earnest money transfers just after we get your offer signed, until all earnest money obligations have been fulfilled.

If you’re used to wiring money quickly, be aware that in escrow matters, it usually involved an extra couple of steps, often involving a courier to deliver hard-copy wiring instructions. Here’s a typical warning tag on escrow email: 

(Escrow) WILL NO LONGER CALL, EMAIL OR TEXT BUYER/SELLER WIRE INSTRUCTIONS. We will only provide them in-person to clients who must wire. DO NOT WIRE FUNDS if you receive a CALL, EMAIL or TEXT regarding wiring funds to CW Title & Escrow, regardless of who the call, email or text is from.  Call CW Title & Escrow immediately at a known, verified number. Online banking/wire fraud is an epidemic in real estate transactions.

Here’s an alert from the Washington Association Of Realtors about this epidemic: Wire-Fraud Alert. And here’s an article from the Washington Post regarding this dangerous situation.

After earnest money deposit/release, the tempo changes dramatically!  At this point, the main contingencies have been either waived or cleared, and the escrow company is taking the helm of this ship, to bring everything into port, up to dock, and securely secured, so all cargo can be safely unloaded to its correct destination. Nice analogy, right?

First up, you will receive a letter from the escrow company and also the title insurance company asking you to authorize them as your closing agent. As most title companies have escrow departments, your escrow company may have a “Title” in their name, so it can be a little confusing (i.e., we use 1st American “Title” Co. for their escrow services, but not their title insurance services). There may be some documentation and verification of identity documents as well. Your lender may be asking for some extra documentation, so stay on guard and available to provide anything asked for. Take a look at the PDFs in this folder, you’ll see examples of these.

 A few things to be thinking about in advance: How will you manage your down payment: Wiring funds for down payment or cashier’s check? Also, making sure you are available for signing just prior to closing date. If wiring, please read warnings about wire fraud. 

While it may seem a bit early, one of the first and most important things we want to think about is how we will handle your final signing of the closing papers. If you’re scheduled to be in Seattle on the date of closing, then this topic is handled. If not, let’s get you in touch now with your escrow officers about how we’re going to facilitate your signing, wherever you may be. More common solutions are designating a trusted person in your life with Specific Power Of Attorney For Sale, to sign your documents in your absence. Another common approach is to have the documents delivered to an escrow or title company in the location you will be at and sign at their offices in front of a notary public. Just a little reminder that we want to address this now, so it’s out of the way.

On a somber note: If we were to describe what we have seen as the most common mistakes buyers have made that can cause a great deal of adrenaline, anxiety, or actual threatening of closing, those would be: 

-Buying a new car and completely messing up your credit report and also your cash to purchase, cash to loan ratio. Just say no!

-Taking out a new credit card.

-Paying off credit cards without being instructed to by lender.

-Ignoring lender’s request for verification of various documents, including taxes, verification of rent, etc. They ask, you deliver.

-Going on vacation just prior to closing and not realizing that they were needed to sign documents in person.

-Not realizing that the funds needed for down payment, which may be in investments and may take longer to liquidate than anticipated. Or even worse, all of a sudden realizing that there would be a tax penalty that they had not considered that was significantly painful.

(As JK Simmons says in his commercial for the insurance company, when you've been around as long as we have, you’ve seen a thing or two. And we have.)

Here’s a fairly accurate set of actions that take place from now on:

The Buyer(s)

  • Mutual acceptance- Buyer and Seller mutually agree on the terms and Earnest Money deposit.
  • Loan pre-approval (when applicable) Applies for a new loan and completing all required forms.
  • Review title report, and any property, disclosure or inspection reports called for by the purchase and sale agreement.
  • Signing – signs loan documents and fulfills conditions contained in the Purchase and Sale agreement, lender’s instructions and/ or the escrow instructions to complete the transaction.
  • Deposits funds necessary to close the escrow.

The Lender (when applicable)

  • Accepts the loan application and other related documents from the Buyer(s) and begins the qualification process.
  • Orders and reviews the property appraisal, credit report, verification of employment, verification of income and assets, title report and other related information.
  • Submits the entire package to the loan underwriter for approval. When approved, loan conditions and title insurance requirements are established.
  • Informs Buyer(s) of loan approval, conditions, lock expiration date and provides a good faith estimate of the closing costs.
  • Deposits the new loan documents and instructions with the Escrow Officer for Buyer’s approval and signature.
  • Reviews and approves the executed loan package and coordinates the loan funding with the Escrow Officer.

The Escrow Officer

  • Receives mutually agreed Purchase and Sale agreement.
  • Updates the title search and examination on the subject property.
  • Acts as a neutral third party in a fiduciary capacity, for all documents and monies required to complete the transaction per written instructions of the parties.
  • Reviews documents received in the escrow: preliminary title report, payoff, new loan package and other related instruments. Reviews the conditions in the lender’s instructions.
  • Escrow Officer prepares the escrow instructions and required document in accordance with the terms of the Purchase and Sale agreement.
  • Signing – presents the documents, loan package(s), estimated HUD/Settlement Statement and other related documents to the parties for signature, and requests the balance of buyer’s funds.
  • Escrow Officers reviews the signed instructions and documents, returns the loan package and requests the lender’s funds.
  • Receives the funds of the loan(s) from the lender(s).
  • Records the Deed, Deed of Trust and other documents required to complete the transaction with the county recorder.
  • Close the escrow by preparing the final HUD/Settlement Statement, disbursing the funds to the seller, paying off existing encumbrances and other obligations. They deliver the appropriate statements, funds and remaining documents to the parties, brokers and/or lenders.

The Seller(s)

  • Accepts Buyer’s offer to Purchase accompanied by a good faith deposit amount.
  • Submits information to the escrow officer such as: payoff, utilities, leased equipment, homeowners association, rental agreements etc.
  • Fulfills any remaining conditions specified in the Purchase and sale Agreement.
  • Signs the escrow instructions, deed and other related documents required to complete the transaction.

The Title Officer

  • Received a request for title report.
  • Examines the title to the property and issues a title report.
  • Determines the requirements and documents needed to complete the transaction and advises the Escrow Officer.
  • Submits a title report to all parties.
  • Reviews and approves the signed documents.
  • When authorized by the Escrow Officer, records the signed documents with the county recorder’s office and prepares to issue the title insurance policies.

 

We’ll be sending you updates as we hit the milestones and get close to the time of signing!

 

Cheers!

 

Bruce, Mark, and Will

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