Condos, apartments, and houses are among the most important examples of real estate in the Philippines. Of course, the ones with the most value are often found in Makati, the country’s financial center, especially with its proximity to various companies and businesses, including clothing shops, malls, bars, and restaurants, among others. Not surprisingly, renting apartments, condos, and houses is a common occurrence in Makati.
This leads to the word “closing”, which is often uttered by real estate agents whenever a deal is about to be completed. It simply refers to the process of signing papers to make the lease final. Of course, there are many steps to be taken first before “closing” the deal. Here are some:
1. Open an escrow account
Opening an escrow account simply means that the buyer and seller must seek a neutral third party to hold all documents and money before the completion of a deal. This is done to ensure that no one from both parties gets ripped off.
2. Title search and insurance
This step involves the services of a title officer, who will conduct a thorough research to ensure that there are no third-party claims to a property that can invalidate a person’s ownership. If problems are found, they should be resolved legally before completing the deal.
3. Hire a lawyer
It is not required, but getting an attorney is invaluable especially if a person needs professional legal opinion on his closing documents. Real estate lawyers with considerable experience under their belts can help potential buyers understand the contents of the documents that they will sign, as well as point out possible problems that can arise.
4. Cost negotiating
This step entails negotiating the fees that the escrow companies will most likely charge. Inexperienced buyers are often compelled to pay for “junk fees” like administrative, application review, appraisal review, ancillary, email, processing, and settlement fees.
5. Home inspections
Inspecting the place is one of the most important steps when shopping for real estate. This ensures that all amenities and facilities are in good working condition; finding a problem gives a person the chance to back out of the deal, or negotiate with the seller to get it fixed.
6. Pest inspection
This step involves hiring a pest specialist to ensure that the house, apartment, or condo does not harbor any wood-destroying insects, especially termites. If pests are found, mortgage companies will usually require that the problem be fixed before closing the deal.
7. Offer renegotiations
After thorough inspections, finding problems gives a person leverage to renegotiate the leasing/buying price with the real estate agent, or even get the seller to pay for the repairs. Buyers can also opt to back out of the deal if the seller does not want to fix the problems.
8. Interest rate lock
This step requires the buyer to lock his interest rate at a reasonable point that he can comfortably afford given the current market conditions. This is made easier by good lending companies, which will watch interest rates and notify the buyer during low points. It should also be kept in mind that rates can vary due to geographic regions, credit scores, and types of loans.
9. Removing of the contingencies
Buyers often stipulate certain contingencies in purchase/lease offers, such as the seller fully disclosing problems with the home, a home inspection not revealing any major problems, interest rates are affordable, and the seller completing agreed-upon repairs, among others. These, however, are usually required to be removed before the deal can be closed.
10. Escrow funding
Signing a purchase/lease agreement often requires the deposit of a certain amount of funds to assure the seller of the buyer’s intent, thus allowing him to take the property off the market. This fund becomes compensation for the seller when the buyer backs out, and is returned to the buyer if the seller backs out. To complete the deal, this and additional funds should be deposited into escrow for down payment and closing costs.
11. Final check
Before making the deal final, the buyer is advised to check the property one last time to ensure that no new damages have occurred, and that agreed-upon amenities are complete.
12. Signing the deal
Of course, the last step involves the signing of the deal – usually at least 100 pages. The buyer, however, is advised to read the fine print carefully to ensure that everything is in order. Some major things to look out for are the interest rates and prepayment penalties.
