With market conditions clearly favoring condo sellers in downtown San Diego, getting an offer accepted can be a cause for celebration, particularly when the listings are often subject to bidding wars. The first step: don’t take the acceptance for granted. There’s always a chance the seller may want to introduce certain conditions, which is why a verbal confirmation must be obtained before any of the next steps are taken.
California Residential Purchase Agreement
In the Golden State, a contract for sale is known as the RPA-CA form. This legal document must be drafted by the seller and presented to the buyer for review. Although home inspections have become a standard part of real estate transactions, this important contingency should be in the contract before it can be executed. In other words, buyers shouldn’t be expected to sign until there is an inspection report to evaluate.
Condominium Board Approval
Listing agents who specialize in downtown San Diego condos can get an idea about whether bidders will be approved as future unit owners by the condominium board. At this point, the buyer’s agent will start the process of seeking approval from the board, and this will also be a contingency provision in the purchase agreement.
Mortgage Loan Processing
In the downtown San Diego market, condo sellers are unlikely to consider bids from prospective buyers who don’t present a preapproval document from a mortgage lender. All purchase contracts are contingent upon proof of financing, and in the case of mortgage borrowers, this means getting the bank to start processing the loan. As long as the offer accepted doesn’t exceed the range of the preapproval, the loan process will begin with orders for title search, appraisal, and flood zone determination.
The appraisal is a crucial step of the home-buying process because it can move things forward, require renegotiation, or even collapse the deal altogether. The real estate agents should already have an idea about the value of the unit, since they likely consulted automated valuation models, also known as pencil appraisals. However, there’s always a chance of a lower appraisal derailing the mortgage process. In some cases, buyers may be expected to increase their down payment contribution or consider presenting an out-of-pocket challenge to the first appraisal.
Commitment from the Lender
If the appraisal comes in at a value that is conducive to closing the deal, the bank will take a look at the title insurance report to ensure a lender’s policy can be issued. Once these steps are completed, a commitment to lend will be presented, along with conditions such as condo board approval, insurance policies, escrow account funding, and a final review of the purchase contract. The goal of this commitment is to reach a “clear-to-close” stage so buyers and sellers can sit down at the closing table.
When you’re looking to buy a condo, downtown San Diego real estate can be one of your best choices. The process after you make an offer can be a bit overwhelming, so it’s a great idea to seek help from 92101 Urban Living, a trusted real estate firm with agents who will guide you every step of the way. To get into your dream downtown San Diego condo as soon as possible, call one of our friendly agents today at 619-649-0368.