Monday, January 21, 2019 / by Nicolette Samash
Buying a home for the first time can be very intimidating. It’s a whole new language to learn about pending listings, competing offers, earnest money, contingencies, etc. There are also a lot of steps that you may not be familiar with or expecting until they’re happening. If you’re anything like me, it’s comforting to have a general idea of what is coming next, especially regarding what may be the largest financial decision of your life! To help alleviate some of that uncertainty, here is a brief outline of what happens during a standard real estate transaction to purchase a single family home:
- Once you get an accepted offer (yay!), one of the first things you are going to do is deposit earnest money. Earnest moneyis the money a buyer puts down with an offer to express their interest in the home. Basically it is there for collateral, so if you decide to walk away for a reason that isn’t allowed in the contract there is a chance your earnest money will be forfeited to the seller. Otherwise, it will be applied to your down payment when the transaction closes. Typically this will need to be deposited with the closer’s office within 1 day of the offer being accepted.
- Unless you waived the ability to have a home inspection, the next step will be getting your home inspection Typically these run about $350 and are a buyer’s expense. The timeline for having a home inspection is negotiable in the contract, but home inspectors can book up quick so it’s best to get one scheduled asap so you have time to review the report and request any repairs if needed.
- After you get the home inspection report, you will review it with your agent and decide what items (if any) you would like to request for repair. You can either request the seller to repair the items or you can request the seller to give you a credit at closing to complete the repairs yourself after the transaction closes. The seller will then have a chance to respond to your request, and you will negotiate and hopefully come to an agreement and proceed. If you and the seller do not come to an agreement and you are still within the timelines outlined in the contract, you will have the opportunity to walk away from the deal and have your earnest money returned to you.
- Once the inspection contingency has been satisfied, an appraisal will be ordered by your lender and a randomly chosen appraiser will go out to the house. This is generally the longest portion of the transaction, as appraisals can take up to 3 weeks to come back. The appraiser will be determining if he/she can justify the purchase price of the house based on comparable homes that have recently sold in the area, and will produce a lengthy report to your lender. If the appraisal comes back low or with repairs needed, it will then become another negotiation between you and the seller.
- Shortly before you close on the home, you and your agent will go back to the property and do what is called a final walk thru. This is where you have a chance to check on any repairs that the seller agreed to complete, and where you confirm that the home is in the same condition as when you originally saw it (for instance, this is no new damage, the utilities are still functioning, there are no burst pipes or flooding in the basement, etc).
- Once the appraisal has been received, your lender really goes to work. The file is submitted into final underwriting where it is thoroughly combed over by an underwriter. Additional documents may be required at this time, or conditions may be added. Once the underwriter is satisfied they will send you a CD to review with all of your loan/closing information, and once that is approved your lender will send documents over to the title company or closer’s office and they will call you to set up a time for you to come in and sign. Depending on the title company, your lender, and how early in the day you are able to get in and sign, recording may happen on the same day that you sign documents. Recording is when all of the funds are transferred to the appropriate places and the home officially becomes yours. If the transaction is unable to record on the same day as signing, it will likely be the following business day. You will not receive the keys until recording is finished.
Of course, your agent and lender will be keeping you updated throughout the process as well and if at any time you have questions as to what’s next or need clarification don’t hesitate to reach out.