Getting a home under contract can sometimes feel like the finish line in a home sale. However, there are still a number of important steps that must be completed before the purchase of the home is finalized. The following is a list of what to expect after a home goes under contract.
1. The Escrow Check is Cashed
The first thing to be aware of when a home goes under contract is that the escrow check will be cashed. In escrow, a third party will hold the funds for the purchase of a home, in order to maintain neutrality and keep everyone involved honest. After the home is under contract however, the holder of the escrow amount deposits the money into the appropriate accounts under the assumption that the sale is proceeding. Generally the buyer forfeits the money in escrow if they back out of the sale after certain contractual deadlines have passed.
2. Inspections are Completed
Inspections are usually completed within a week of a home going under contract. The sellers of the home should not be present while the inspector completes a thorough investigation of the entire home. Any issues that arise should be reported to the real estate agents involved, and the sellers of the home will be made aware of any repairs or replacements that need to be made before proceeding with the home sale. Once the buyers approve the status of the home after inspection, an appraisal should be ordered.
3. Appraisals are Completed
The appraisal of the home will generally occur within a week following the inspection. If the sale price of the home matches the appraisal value determined, the sellers need not take any further action. If, however, the appraisal is lower than the asking price of the home, a negotiation may need to occur to ensure that the buyers are paying a fair price for the property.
4. Disclosure and Title Review
Once a home is under contract, the buyer should start a review of all documents associated with the property. This step should be completed with the assistance of a lawyer or real estate agent so that any potential problems with the history or legal information on the property can be identified and dealt with immediately. The buyer should have thorough local market knowledge, and be familiar with all of the details surrounding the property they are purchasing.
5. Mortgage Details are Determined
The buyer should start researching mortgage companies far before they sign a contract for the property they want. They should talk to their bank about interest rates and try to lock in a rate until the closing of the house. The goal is to get pre-approval for a mortgage as soon as possible to move the buying process along quickly. Once approved, the bank can order inspections and appraisals on the home.
6. Insurance Matters
Before moving into their new home, the buyer should begin getting home insurance quotes for their new property. Send the companies a copy of the MLS listing on the property. Handling the insurance as soon as possible will guarantee the protection of the investment made by the buyers.
7. Walk Throughs
One or two days before closing, make sure to have a final walk through to check one last time that the home and property are still in the exact condition outlined on the appraisal and inspections. This step might seem redundant, but failure to complete it might result in an unexpected and unfortunate surprise for the new homeowners.
8. Transfer Utilities
It is also important to check with the seller as to the date when utilities will be shut off at the property. The buyer should have water, sewage, and electric transferred into their name before moving in. If there is a lapse in coverage for utilities it could potentially result in damages to the home.
9. Closing on the Property
Once the appraisals are done, your mortgage goes through, and the pricing details are discussed, you are just about done with the journey to home ownership. The final step is to get the “clear to close” and arrange a closing day. Make sure everyone brings ID and any other important closing documentation to the closing. After another round of intense paperwork, it’s time to start planning the house warming party.
Having a home under contract is no small feat, and should be considered a major step in the process of buying a property, but it is not the end of the operation. The period between signing the contract and closing on the house is essential for getting questions answered and for learning as much as possible about the property and the details of the exchange. Make sure to be aware of all the important details and actions that need to be completed to ensure that the contract leads to the smooth sale of a home.