If you are an out-of-town Los Angeles home buyer the process may be different if you have bought a home in another State. In fact it probably is.
California is an escrow state. What is Escrow? Escrow is a neutral party acting between the buyer and seller in the home sales process. They are provided with the terms of the contract and their job is to ensure that all terms are abided by and completed before any funds and title change hands. No attorneys are involved and there is no “closing table”.
Upon the execution of the purchase contract the buyer will need to remit their good faith deposit to escrow within three business days. This may be in the form of a personal check, although for an out-of-state buyer it is usually wired in.
Escrow instructions will be sent to the buyer, seller and their agents with all the terms of the contract laid out including timelines for removing contingencies, such as inspection, appraisal and loan approval. These instructions will need to be approved by both buyer and seller and their agents. If anything changes during the course of escrow, such as extension of the escrow period, amendments of terms, etc. the escrow officer will issue an amendment to be signed by both parties. Nothing is allowed to be changed throughout the process without the agreement of both buyer and seller.
There are mandated items which need to be in compliance depending on which City you are in. Escrow will need to receive confirmation that those items meet City standards. The seller is responsible for those and will order the relevant contractors to ensure compliance. If a termite inspection and resulting treatment by the seller is part of the contract, the inspection and completion certificates will need to be delivered to escrow.
During the course of escrow paperwork will be sent to the buyer and seller for signature and need to be addressed promptly. There will also be paperwork sent from your real estate agent. These are mostly State-required disclosures and are separate from the actual escrow process. Escrow is only concerned with the terms of the initial purchase contract and any counter offers and addenda.
The seller is responsible for providing all known disclosures to the buyer within seven days of contract signing. The buyer is responsible for completing all necessary inspections. It is mandatory for a buyer to conduct a general inspection unless they waive that right, however that is not recommended. And in addition to the general inspection it is advisable order additional inspections, especially for a single family home, and especially if there is the slightest suspicion that there may be a problem: foundation, sewer, chimney and roof. Once all the inspections are completed, if necessary you will negotiate repairs or credit with the seller. If no agreement is met then you can cancel the contract. Nothing is final until all contingencies have been removed
Since you may not be present throughout the entire sales process it is important to have a Realtor® you trust handling it in your absence. They will be able to order all the inspections and arrange to be there while they are conducted. Who knows, maybe you can “tour” homes while out-of-town via FaceTime with your Realtor®. I recently had a buyer purchase my listing this way.
The mountain of paperwork a buyer will be faced with when buying a home in Los Angeles can be daunting, but much of it is State disclosures. Escrow cannot close until ALL the terms of the signed agreement have been met, including clean title. Make sure you understand the terms of the purchase agreement you are signing as the whole escrow process revolves around that. You can sign all the Realtor®-originated paperwork digitally, and escrow will FedEx you their paperwork which needs original signatures. This will include the Grant Deed designating you are the new holders of Title.
Bottom line, you can easily by a Los Angeles home without having to be here.
For more detailed information on buying a home in Los Angeles read the Buying Process.
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