Congratulations! Your offer got accepted! Is your realtor using real estate jargon such as “escrow” and “contingencies” and don’t know what they mean? Here is a step by step guide of what you can expect.
Step 1: (Days 1-3)
Earnest Money Deposit:
- This ensures you, as a buyer, has skin in the game.
- The amount varies depending on the transaction but is typically 1-3% of the purchase price.
- It is due within 3 business days of acceptance of your offer.
- You can deposit by personal check, cashier’s check, or wire transfer.
- Deposit gets added as part of your down payment.
Step 2: (Days 3-7)
- Preliminary title report – As you read through this report, you may find it challenging because there will definitely be lots of legal terms; but it is important to take your time to go through it so that you won’t be blindly purchasing a property. This title report is an extensive search of public records and provides an overview of the history of ownership, encumbrances (i.e. claims or restrictions) on the property, and any other relevant elements of legal history. These include liens placed on the property (e.g: if a company renovated the house and the homeowner didn’t bother to pay the company in full), and encroachments and easements. As stated above, it will provide restrictions that may have been placed on the property. For example, the report should show if there are restrictive development options if a property is listed as part of a historical district.
- Seller provided disclosures (TDS, SPQ) – The TDS and SPQ are documents completed by the seller asking for the seller’s knowledge regarding the true condition of the property. The seller must disclose any “known” defects and/or information they have that might affect the property.
Step 3: (Days 3-17)
- Physical Inspection – Standard $250-$350.
- Termite – cheap insurance policy $75-$150 (newer homes typically aren’t problematic, but it can’t hurt)
- Any other inspections you may feel are necessary such as: AC, Roof, Pool. $50-$100 each.
Webber Realty Group has a list of trusted professionals we have personally vetted to perform inspections and make sure the repairs are done right.
Step 4: (Days 10-17)
- Your lender will schedule an appraiser to go out to the property to give their opinion on the fair market value of the home.
- This is done because the bank will not lend more money than the house is worth.
- If the appraisal comes in lower than the purchase price: you, as a buyer, have multiple options but the 2 most common ones are 1. Renegotiate the purchase price to be at the appraised value 2. Make up the difference between the appraisal and the purchase price with a larger down payment.
Step 5: (Days 14-17)
Request for Repair:
- Once you have completed all the inspections you think are necessary and reviewed all the disclosures, you now have the option to submit what’s called a “request for repair.”
- The buyer and seller negotiate what, if anything, should be fixed or how much, if any, of a credit is to be given to the buyer.
Step 6: (Days 17-21)
- Inspection – Once you have performed all of the inspections you feel are necessary, and negotiated the request for repairs/credit, you will remove your inspection contingency which is typically 17 days. During the first 17 days, you have the option as a buyer to back out of the transaction if you are not satisfied with the condition of the home. Remember, contingencies have to be removed by the buyer in writing, it doesn’t automatically remove and lock you in at 17 days. Don’t freak out.
- Appraisal – If the appraisal comes in lower than the purchase price, you have the option to back out
- Loan – 21 days. You have 21 days to make sure you are able to qualify for your loan.
Step 7: (Days 25-30)
- Sign Loan Documents
Step 8: (30-45 Days)
- Once all documents are signed and the loan has been funded, *escrow will have the documents sent to the county to be “recorded.” Once this happens you are officially the new owner of the home…
- Get the keys!