10 Essential Steps to Take After Your Offer is Accepted on a House
When your offer on a new home is accepted, there are several key steps you need to take to ensure a smooth transition. Your real estate agent will be your guide throughout this process, providing expert advice tailored to your specific situation. Here's an overview of the 10 crucial steps your agent is likely to recommend.
Deposit the Earnest Money
To show your commitment to the purchase, you'll need to deposit earnest money into an escrow account. This money demonstrates your seriousness as a buyer, and it will be held until the deal is finalized. In case the deal falls through, you may still be required to forfeit the earnest money, but if the terms of a contingent offer are not met, the money can be returned.
2. Submit and Process Lender Documents
If you have already secured a preapproval, this step will be quicker. A preapproval can make your offer more attractive to sellers, especially in a competitive market. As a buyer, you'll need to submit your loan request and provide extensive documentation regarding your financial situation. These documents will then be processed by your lender.
3. Review and Clear the Title
A title company will clear the title of the home to ensure there are no existing liens or encumbrances. This is often a seller concession, with either the buyer or seller covering the cost.
4. Complete the Home Inspection
Typically scheduled 7-10 days after the offer is accepted, the home inspection allows the buyer and inspector to assess the property privately. As the seller will not be present during the inspection, you need to prepare the home accordingly. Clear access to areas such as the attic, crawl space, electrical service panel, and furnace is crucial. Any obstructions might require rescheduling the inspection, delaying the closing timeline. The inspection is a critical stage, and it can potentially impact the deal. Even without an inspection contingency, buyers may walk away if significant issues are discovered. Buyers with a contingency can negotiate repairs before closing.
5. Ensure Negotiated Repairs are Made
If repairs have been agreed upon, the seller must complete them before closing. It's advisable for the seller to hire reputable contractors who can work efficiently to expedite the process.
6. Conduct a Home Appraisal
A home appraisal is typically required by mortgage lenders. It determines the property's value and the maximum amount the buyer can borrow. If the appraisal falls short, the buyer and seller may negotiate or consider an "appraisal gap" agreement. This agreement requires the buyer to cover any difference between the appraised value and the loan value within certain limits.
7. Obtain Home Insurance
While not legally mandated, the buyer's lender will require them to have a home insurance policy. This policy is often paid through an escrow account.
8. Transfer or Turn On Utilities
Both buyers and sellers should coordinate utility transfers. Avoid canceling utilities immediately upon receiving the closing date to prevent complications in case of rescheduling. Schedule utility transfers with the closing date in mind.
9. Conduct a Final Walkthrough
The purpose of the final walkthrough is to ensure the property's condition hasn't changed since the last visit, verify that agreed-upon repairs are completed, and ensure all contract terms will be met. The final walkthrough typically takes place 24-48 hours before closing. Prepare by keeping the home in the same condition as during the inspection, ensuring it is clean and repairs are finished.
10. Carry Out the Closing
Before closing, you'll receive a closing statement or seller's Closing Disclosure form, detailing all expenses and credits from the sale. Carefully review this statement before the closing to ensure accuracy. Closing is the final step in the home selling process, transferring ownership to the buyer. The closing date is usually determined during the negotiation phase, occurring 30-60 days after accepting the offer.
Contingencies That Can Cancel an Accepted Offer
Contingencies are common in home offers and allow buyers to cancel the agreement if certain conditions are not met. Here are the three most common contingencies:
Inspection Contingency: This allows the buyer to have the home inspected within a specified time frame. The findings may lead to canceling the contract or negotiating repairs.
Appraisal Contingency: If the home doesn't appraise at the agreed-upon value, the buyer has the right to cancel the contract or renegotiate. This may cause delays and potential repair expenses.
Financing Contingency: This contingency ensures the buyer can secure financing for the house within a specified period. It establishes the agreement on the buyer's ability to obtain a mortgage.
In conclusion, understanding the necessary steps, timeframes, and contingencies after accepting an offer is essential for a smooth home selling process. Prepare for the home inspection as a seller and speak to a lender about preapproval as a buyer. By following these steps, you'll ensure a successful transition to homeownership.