Bob Kutschbach, owner and broker of Carleton Realty, explains what to expect when an offer is accepted.
Most people think that the end of a real estate transaction is when an offer gets accepted. Actually, this is the beginning of the contract. You negotiate the contract, the buyer and seller accept, and the date that the accepted contract is returned to the other party is the start date of the contract. It is not the date that you sign the contract, it is the date that it is delivered to the other persons whose offer was accepted.
The contract has time frames. For example, the buyer has to get a pre-approval from the lender within a certain number of days and they have to notify the seller of which lender was chosen. Then they have to schedule a home inspection. Typically a buyer in our market has 7 – 10 days to have the home inspected. A normal home inspection is about 2 hours long. It is vital that the buyer be there to see and hear the advice of the home inspector, not only read a report but see it, experience it, listen to the inspector. The buyer may learn how to maintain the home, turn off water or electricity, how to change the furnace filter, among other things.
After the inspection, there will only be a few days to ask for remedies. It is important that we watch these dates, get the inspection done in time, get the request to remedy to the seller, and that we come to a consensus between the buyer and seller as to what repairs will be made.
Next is the appraisal. We have to make sure that the appraisal is ordered to make sure that we close on time. We get all the appropriate information to the lender. If there are any negative comments on the buyer’s credit report, the buyer will have to explain them. The buyer will have to provide tax returns and pay stubs. many buyers are concerned about the amount of documentation the lender requests but it is perfectly normal. The buyer has to be on top of getting all the requested information to the lender so that it can go to underwriting. But before it can go to underwriting we need the appraisal to come back. If the appraisal comes in lower than the purchase price, we need to start negotiating again. Will the seller come down in price? Will the buyer come up with more money for a down payment? This is also not uncommon since we have record prices. The appraiser may mention repairs that the seller will need to make before you can close.
Once the loan is approved, the contract will go to the title company. They will work on the file and will likely need some things answered. For example, if you have a common name like Brown, Smith, or Evans, there may be liens that look like they could be yours. The title company will have to search down each of those liens to make sure that they are not against the seller. There are lots of steps in the process to get to closing. We need the buyer and seller, and if they are married, their spouses to sign off on “dower rights”. Every party at the closing will need their I.D.s to make sure that they are the true lawful buyers and sellers. After the closing paperwork is sent to the lender, the lender wires the funds to the title company. It is possible to close one day and not disburse the money until the following day. Don’t be surprised if you are the seller and don’t receive your check on closing day. It will either be wired to your bank account or a check can be picked up.
If you have questions about the home buying and selling process please reach out to one of our expert agents!