In today’s competitive market, for home buyers just getting an accepted offer on a house often feels like the culmination of a very long process.
It’s true that finding a home and writing up a competitive offer is a process in and of itself, but when that offer is accepted, there are a lot more steps to complete before that accepted offer becomes a closed deal and that new home is officially yours.
That’s why I thought I’d talk about the process that takes place after your offer on a home is accepted. When it comes to closing on a home, there are a lot of important steps, and being prepared can make a stressful process much easier.
No two deals are the same. Every home sale is unique and presents its own challenges, but there are many common steps that I’d like to discuss.
This post should serve both as informational and caution, for there are many things that can go wrong and derail the process of a home sale. This is one reason why I always strongly advise my clients to subdue any impulse to post on social media about going under agreement!
(Save all the celebratory posts for after the closing!)
But for now let’s talk about what you can expect in the weeks after your offer on a home goes under agreement.
Just a note: as I mentioned earlier, every transaction is different. This blog post will be most relevant to home buyers using conventional lenders to finance the purchase of their home. This is the predominant method for real estate transactions (close to 90% in fact, according to the NAR). Cash sales or rent-to-home purchases present different hurdles and procedures that I won’t discuss here.
Now back to the dream scenario of having an accepted offer on a home. Yay! The first person you need to notify is your lender (after maybe mom and dad or favorite family and friends, of course). Notifying your lender gets the ball rolling, as a majority of the process from here on out has to do with securing financing for the sale.
Most offers include a money deposit. The amount is included in your original offer and is your way of proving the sincerity of your offer prior to it being accepted. This is called an Earnest Money Deposit, and you’ll have to cut a check for the amount you specified in your offer. The money is placed in escrow until the closing date.
I’m assuming you’ve followed my advice from previous posts and included an inspection period with your offer. So now you need to find a home inspector (if you haven’t already) and schedule a day for the home inspection that fits within your inspection period.
After the home inspection, you’ll receive an inspection report identifying any problems or potential problems or concerns with the property. The inspection report is yours to review and use to negotiate with the seller to resolve any issues encountered during the home inspection.
While waiting for the home inspection and during the inspection period you should be getting all your required documents to your lender. Your lender will specify what he or she needs, but the list usually requires at a minimum recent pay-stubs, bank statements, W-2s and tax files from the last few years.
A lot of things are happening behind the scenes at this point. Your lender is working on securing your mortgage for the closing. A title company or property lawyer is fast at work dotting the Is and crossing the Ts to make sure there are no issues when you officially buy the property and the name on the deed is changed.
The last major hurdle (and the day every real estate agent dreads) is the home appraisal. This is the part when an independent appraiser comes to your soon-to-be (hopefully – fingers crossed) home and assesses its value for the bank ( the company financing your mortgage).
This is important because the home needs to be worth the amount of money being financed. (Otherwise no bank or lender will want to take on the risk of loaning out so much money with no guaranteed return).
In today’s market, with most homes being sold above listing price, the home appraisal has become a true nail-biting event! The risk of a home’s value coming in under the agreed price of sale has increased greatly! And with that risk comes the greater likelihood of your deal falling apart.
I want to note that even though the risk has increased over the last few years, most homes still appraise above the value of the sale price. And even if the appraisal falls short, it doesn’t necessarily mean the deal is done.
You can put more money down or negotiate with the seller to decrease the total amount financed in order to secure funding for your new home.
Once the home appraisal comes back, you’re just about in the clear — the clear-to-close, of course.
I’ve highlighted here the major components you can expect after you’ve gone under agreement on a home sale. By no means are these the only steps involved. But hopefully this post gives you a better idea of what to expect.
With a great agent and mortgage broker this process is easy and clear. I’m there for my clients at every step, helping them better understand what’s expected from them and keeping the process together.
As your agent and advocate, I work with your lender, the title company, the seller agent and any other interested party to ensure there are no missteps and everything is ready to go for closing day.
It’s my job to make sure you’ve scheduled your home inspection so that you have enough time to receive your report and negotiate with the seller on any items. It’s my job to make sure the home appraisal is scheduled well enough in advance of the closing date.
The process from accepted offer to closed deal is multifaceted, but with a good real estate agent, a trustworthy lender and diligent title company working together, it’s a painless process for you.
It’s my job to make sure that my clients remain excited and eager to close on their home. If you have any questions, or would like to know more, feel free to contact me any time!
Happy home buying!