This is the last post to wrap up the Buyer’s Series, and I’m going to run through the main steps and expected timing when buying a home. This will help answer the “what’s next?” after getting an accepted offer.
Just to recap, in Part 1 of the Buyer’s Series, I discussed where to start as a home buyer:
Connect with a real estate agent
Choose a lender
Get pre-approved
Determine loan options – refer to Part 3 of the Buyer’s series, which covers the different types of home loans
The steps above usually only take a few days, and then the shopping begins. Part 2 discusses showings and crafting offers. Now this part can take days, weeks, months, even over a year in some cases. It really just depends on how long it takes to find the home you're interested in AND get an accepted offer. The second part has been tricky the last few years because of how competitive the market was, with interest rates at records lows.
Once your offer is accepted, a clock starts for many events. Refer to Part 4 of the Buyer’s Series on contingencies for a details discussion on many of these items. It takes roughly 35 days to close a transaction, so I am going to work back from day 35 with the most common events leading up to closing:
Day | Event |
0 | Offer accepted |
3* | Submit earnest money |
3 | Order inspections |
5* | Obtain loan approval |
14* | Inspections complete and inspection response submitted to seller |
28 | Appraisal conducted (ordered by lender) and results received |
30 | Remediation as a result of inspection or appraisal results |
32 | Receive settlement/closing/HUD statement |
32 | Schedule closing |
34 | Wire money for closing to title company (if needed) |
Prior to closing | Final walk through (optional) |
35* | CLOSING |
Depends* | Possession (may be on closing day, before, or after) |
*These numbers are filled in on the purchase agreement. They are originally blank boxes on the document and your agent fills them in before you sign it, so pay close attention to these numbers because they are not prepopulated.
EARNEST MONEY: The time to submit earnest money may be 7 days or 24 hours. Some agents have shortened these timelines in the last few years for the following reason: that time between an accepted offer and when earnest money is due may be used by some buyers to continue shopping around and consider other options. I do not recommend doing this. It’s a waste of the seller’s time, and it can really reduce their odds of selling at no fault of their own.
LOAN APPROVAL: Obtaining loan approval usually involves telling the loan officer you're pre-approved with that you have an accepted offer, the address, and providing any additional paperwork they may need to complete the loan application. Your agent should be in contact with your loan officer and be able to provide them with the most recent transaction documents.
INSPECTIONS: If you are ordering inspections, I recommend ordering them as soon as you submit the earnest money. Even if you have 14 days to complete inspections, calling sooner may give you more scheduling options. If you have the inspections completed quickly, it may also give you time for specialized follow-up inspections, contractor estimates, or extra time to mull over the results.
INSPECTION RESPONSES: Once inspections are complete, inspection responses must be submitted to the seller by the number of days stated in the purchase agreement (unless the home is being sold as-is). The standard used to be 14 days, with an additional 7 days that couldbe requested as an extension. These numbers have shortened in the last few years as a non-monetary negotiation tool, so refer to your purchase agreement.
APPRAISAL: Ordinarily, by 4 weeks into the transaction, the appraisal has been executed and the results have been received. If there is any negotiation needed due to the inspection or appraisal results, that needs to be completed prior to closing numbers being calculated.
PREPARATION FOR CLOSING
Check in with the mortgage lender to make sure they have everything they need. They may ask for more documents prior to closing.
Work with your agent to schedule closing. Title companies are open roughly 8am – 5pm. The last closing title they usually have is 4:30pm. Closing takes about 30min to an hour.
The title company will communicate with the lender to prepare the final closing numbers. You must receive the settlement statement with the closing numbers prior to closing.
Total funds toward closing over a certain amount, have to be wired to the title company for closing. You can’t just show up to closing with $10,000 check, for example. I recommend executing the wire the day prior to closing. It ensures it will be in the title company’s account by closing.
Paying contractors at closing: checks need to be written to the contractor/company or the money has to be held in an escrow account by the title company. Not all title companies offer the ladder option.
YOU CANNOT EXCHANGE CASH AT THE CLOSING TABLE
This may be specific to Indiana. What does it mean? There are two most common scenarios where this applies.
The inspection uncovers needed repairs:
In this scenario, the seller can’t simply write you a check at closing to complete the repairs at a later date. The ways to adjust for needed repairs are to:
Adjust the purchase price.
Have the title company hold the repair cost in escrow at the closing and pay contractors as the repairs are completed after closing.
The title company can write checks at closing to specific contractors for the repairs.
A few details here to keep in mind, and these numbers correlate with numbered scenarios above:
Not all sellers are willing the negotiate price. This is an obvious reality but if your inspection has uncovered a serious structural or possible safety issue, you may have more negotiating power, if you still want the house. Once the seller is informed of a serious issue, the seller and the real estate agent are obligated to disclosure the issue to future potential buyers. If the seller is unwilling to negotiate with you, then the purchase agreement may fall through and the house may go back on the market with the seller now having to disclose the serious issue(s).
Not all title companies will hold money in escrow after the closing for repairs. Check with your agent and title company.
DISCLOSURE: this post is written from my own personal experience. I am not a lawyer or mortgage loan officer. Consult with your real estate, mortgage, and legal professional for guidance on your unique situation.
Comentarios