Step by step Guide to Buying a Home in Palm Springs

So you’ve found the Palm Springs home you want to buy — now what?

Whether it’s a mid-century modern gem, a sleek golf course condo, or a stylish desert retreat, knowing what happens after you make an offer up until you get the keys can save you stress, time, and money.

In this step-by-step guide, I’ll walk you through exactly what to expect in the Palm Springs home buying process from step by step.

We’ll also look at how to avoid some costly mistakes along the way.

Step 1: Making an Offer on a Palm Springs Home

In California, offers to purchase resale homes are made on a standard form called the Residential Purchase Agreement (RPA).

If you’re buying new construction, builders often use their own contracts, which may (or may not) include the same protections as the RPA. Some agents are not familiar with those documents so you have to review those with an attorney.

For offers made on the standard RPA form, your agent will fill in applicable fields and prepare the document for you (most likely) electronic signature. In addition to the property address, assessor parcel number, your legal name, the escrow period and who represents who, the price and specific terms are also included.

Please note - as the standard form is used for both condos and single family homes, there may be a number of non applicable fields that do not need to be filled in.

Once all buyers have signed the purchase offer, your agent will submit the offer along with your supporting documents such as a pre-approval letter from your lender or your proof of funds (POF) if you are paying cash or for your dowwn payment.

These days personal letters to the sellers are often not presented and are odiscouraged.

Step 2: What are Counter Offers?

Once your offer is submitted, the seller has three choices: accept, reject, or counter.

The default time for a response from the seller is 3 days after the last buyer signs. However you can also specify a shorter response time.

If the seller counters your initial offer that can take two separate pathways:

• SCO (Seller Counter Offer) — issued to just you

• SMCO (Seller Multiple Counter Offer) — issued to multiple buyers

Negotiations may go back and forth several times before everyone reaches agreement on price and terms but most typically the

Step 3: Understanding Contingencies

The RPA includes several contingency periods that protect you as a buyer, including:

• Loan and appraisal contingencies

• Homeowner’s insurance contingency

• Inspection contingency — also known as your due diligence period

Many buyers think that the inspection contingency is only for physical aspects of the property but during the inspection contingency, you’re allowed to investigate everything about the property — not just the house itself, but also the neighborhood and surrounding area.

The insurance contingency - which used to be part of the inspection contingency, is a newer addition as a separate contingency because of some of the challenges in securing insurance since many insurance companies have left California or are not writing new policies. If you are buying a condominium there will be a master insurance policy for the condo complex. If you are getting a mortgage, your lender might require you to get “walls in” insurance which is referred to as HO6. Even if you are not getting a mortgage, you might want to get the walls in insurance for additional protection. Depending on the property you buy you may also want to consider earthquake insurance which in California is issued through the California Earthquake Authority (CEA) which is often billed through your primary insurer.

The loan and appraisal contingency are fairly self explanatory. Even if you have a pre-approval letter, if for any reason your loan is ultimately declined within the contingency period, you can cancel the purchase contract. (You must make a good faith effort to provide the lender with everything they request.)

Similarly for the appraisal contingency. If the property does not appraise at the contract price, you can cancel within the contingency period. You may also be able to renegotiate with the seller and strike a deal at a different price than the contract price.

Please note - you can stipulate in the purchase contract that the property has to appraise for a specific amount lower than the purchase price.

Step 4: Allocation of Costs — Who Pays for What?

The purchase agreement will spell out how closing costs are divided. Closing costs are the fees and expenses you pay in addition to the purchase price in order to close escrow.

Typically, each party pays their own escrow and title fees, but buyers in Palm Springs can also ask sellers to pay:

• HOA transfer fees

• Lease land assignment fees

• Home warranty plans

• Their agent’s commissions

• Points to by down their loan

The purchase contract will also stipulate who pays for certain other costs such as recording fees, county fees, etc.

Everything is negotiable, so be sure you understand what you’re agreeing to.

Step 5: Choosing Escrow and Title Companies

Title insurance protects the buyer against any claims made against the title (ownership) after the close of escrow. Sometimes the title company will also be the escrow holder. In Southern California, there are also independent and broker owned escrow companies. The escrow company executes what is in the purchase contracts and has been agreed to by the parties and will issue “escrow instructions” that the buyer and seller have to sign. Any changes to the purchase contract such as a different close of escrow date, purchase price, etc will have to be memorialized by an escrow amendment. Some changes to the purchase contract will require an addendum to the contract which may also have to be signed in addition to the amendment.

Most of the time, the seller (or their agent) will choose the escrow and title companies — this is often referred to as “Seller’s Choice.”

Once the offer is accepted, the listing agent usually opens escrow, and you’ll need to wire your earnest money deposit (EMD) within three business days. This is one of the few times the contract counts business days and not calendar days.

Step 6: Doing Your Home Inspections

Most Palm Springs buyers start with:

• A general home inspection

• A termite inspection

Depending on what those uncover, you might also add specialists for roof, HVAC, plumbing, pool/spa mold, or structural inspections.

Home inspectors will “call out” numerous issues with any property. Some of these should be addressed either before or shortly after the close of escrow. Those are usually the items that are related to health and safety. Others issues become your “honey do” list.

While most home inspectors will find similar issues in homes, there can be differences. When choosing a home inspector, finding someone who has inspected similar types of homes in the area you are buying in can make a huge difference.

Step 7: Requesting Repairs or Credits

After inspections, you can submit a Request for Repairs asking the seller to:

• Make certain repairs

• Provide closing cost credits

• Reduce the price

Sellers aren’t obligated to agree (other than smoke detectors and water heater straps required by law), but this is your opportunity to renegotiate — or even cancel if major issues come up.

If possible, it is best to get a credit rather than have work done and paid for by the seller. In most instances, that can be done but for certain kinds of loans, such as a V.A. loan, termite work, for example, must be completed prior to the close of escrow.

Step 8: Closing Cost Credits Explained

If the seller agrees to give you a credit, it will be applied to your closing costs at the end of escrow.

Just note: if you’re getting a loan, credits can’t exceed the actual amount of your closing costs or certain percentage caps set by the lender.

Step 9: The Final Walkthrough

Right before closing, you and your agent will do a Verification of Property — often called the final walkthrough — to confirm that:

• Any agreed-upon repairs were done

• The home is in the same condition as when you made your offer

• Any included furniture or appliances are still there

The final walk through is not a fishing expedition to find new things wrong with the property. For example, once furniture is removed, you may notice scratches, damage and other imperfections that were not evident when there was furniture in the home.

Step 10: Closing and Getting Your Keys

Once all contingencies are removed and your loan “funds”, escrow will set up recording the deed by the title company with Riverside County.

When your agent gets the “recorded” call — you get your keys! 🎉

Occasionally a seller may remain in the home for a few days on a leaseback agreement, but this is less common in Palm Springs than other parts of Southern California.

Palm Springs-Specific Topics Every Buyer Should Know

Buying in Palm Springs comes with a few unique considerations that buyers from outside the area often overlook:

• Buying a Furnished Home
  Many homes here are sold turnkey furnished — make sure everything you expect is listed on the inventory sheet attached to the contract.

• Leased Land
  Many Palm Springs properties sit on leased (not fee simple) land. Be sure you understand the terms, costs, and implications of leasehold ownership.

• Short-Term Rental Permits
  Palm Springs STR permits do not transfer on sale. If you want to operate a vacation rental, you must apply for a new permit after closing.

The Biggest Mistake Palm Springs Home Buyers Make

The number one mistake Palm Springs buyers make?

Being represented by the listing agent. The listing agent is the agent the seller has hired to get the highest price and best terms for the seller, not to protect the buyer’s interest. While “dual agency” is allowed in California (it is not permitted in some other states), it is doubtful that most people would not have the same lawyer represent them in a legal proceeding and the same should apply to real estate purchases.

Always have your own dedicated buyer’s agent to guide and advocate for you.

Ready to Buy a Home in Palm Springs?

Buying a home in Palm Springs can be smooth and stress-free — if you know what to expect.

And if you’re ready to start your home search or just want expert advice from a local — reach out to me anytime.

Ellis Posner - Real Estate Broker CA DRE 01416970
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