In any real estate market, receiving and negotiating an acceptable offer on your home is cause for celebration. Obviously, it’s the first of many steps but still a milestone not to be taken lightly. Now that you have agreed upon an offer between you and a Buyer, what happens next?
There are a number of next steps that we’ll outline and elaborate on so that you have some benchmarks to measure your own sale against:
a) Home Inspection Contingency: An inspection will be usually written 7 days from the time of the offer. The inspection will consist of a thorough checking of all major structural and mechanical components of the home. The heating or electrical systems are the most likely suspects where issues may arise. If an issue does arise, classify it as something you were aware of (i.e. you knew the windows were original) or a surprise (i.e. the heating system is on life support). If the inspection points out things that were known then don’t expect any further negotiating on the price. If there are surprises, a Buyer will usually push back for the issue to be addressed or the price reduced.
b) Mortgage Contingency: A mortgage contingency is to protect the Buyer in the event that they are unable to obtain financing. This contingency is usually 30 days after the offer is accepted. It is important to make sure the pre-approval letter is thoroughly reviewed and that a full credit check and verification of income is performed on the Buyer by their lender of choice.
2) Once the home inspection is complete and both parties are satisfied with the results, a Purchase and Sale Agreement will be drafted by the Seller’s attorney. The P&S, as it is commonly referred to, is similar to an offer but with more language protecting both the Buyer and the Seller. It will also have a place for the mortgage contingency as referenced above.
3) Part of satisfying the mortgage contingency requires the Buyer’s bank to order an appraisal. Remember, all Buyers who get a mortgage have their bank conduct their own appraisal to ensure the value is at or above what the offer price is. This person will come to the home to view both the inside and outside and compare it to other homes that have recently sold or gone pending. An appraiser will also take into consideration anything that came up at the home inspection that is not being addressed, such as structural damage or a leaking roof.
4) A mortgage commitment letter will be issued by the Buyer’s bank once all conditions have been met and the loan will be given “Clear to Close” status.
6) The day before the closing, makes sure home is in “broom swept condition” and all personal items have been removed.
7) The closing itself is not what it used to be or even what you expect. Most closings are done in pieces where the Sellers sign documents the morning of or night before, while the Buyers sign documents separately and then everything gets filed at the Registry of Deeds. The days of exchanging keys and pleasantries around a table are a thing of the past.
If you hire an experienced real estate agent they will be able to check all the documents to make sure they are all in order and can answer any questions you may have. They can guide you through these steps to make sure the transaction goes smoothly.