Getting your offer accepted, but it’s just the beginning of the process
Getting an offer accepted is one of the most exciting moments of the home-buying process. But it’s also when things get more serious. By now, you’ve probably heard the terms “closing” and “escrow” thrown around, but a lot happens between offer acceptance and closing escrow. During the closing process, you’ll put down an earnest money deposit, perform any necessary inspections, negotiate for repairs, get your home appraised, lock down your loan and, if necessary, cancel the deal without losing your deposit.
When your offer has just been accepted — congratulations! — you are fired up and ready to move into your new home. But don’t neglect the steps that protect both the buyer and the seller. Let’s take an in-depth look at the post-offer approval process so that you can get a good grip on what happens before you close on a home.
Things Will Come Up
The first thing that you need to realize is that things are going to come up. Even your dream property might have some issues that you won’t discover until later in the purchase process. These issues will be discovered by an inspector and can be negotiated during the “Due Diligence Period” of your offer. You hired an inspector and they will find things that need to be repaired or replaced.
You might find that your lender won’t provide you with terms that you’re happy with. You may have to work on credit or downpayment money. Be prepared for these types of things to happen, and don’t get frustrated if everything doesn’t go completed smoothly the first time around.
After your offer is accepted some experience “Buyer’s Remorse”, especially first time Buyers. Focus on moving forward positively. Take your time to make sure you’re making the right decision. In some cases, the problems that arise are fairly significant. During your contingency period, as long as you honor the timelines and guidelines in your offer contract, you’ll be able to cancel your offer without losing any of your earnest money deposit. Prepare yourself for the following possibilities:
You discover major issues with the home during inspection.
After your offer is approved, you will have the opportunity to inspect the home and conduct walkthroughs before closing. In some cases, you might discover major defects that are costly to repair or that significantly lower the expected value of the home. These might be a damaged roof, sewer problems, termite infestations or foundation issues. Look for major issues, structural issues. If you encounter any of these problems during the inspection process, you should be wary. If the seller has been dishonest about one thing, they could be hiding other issues as well.
In some cases, sellers may be willing to make repairs free of charge before closing. But many sellers sell homes “as is,” meaning that they are not required to make any repairs to them.
If you find these issues and the Seller will not address them, you may want to purchase a “Home Warranty’ to cover things like a hot water heater, air conditioner, etc.
You can’t obtain the type of financing you want.
Even if you’re already pre-approved for a mortgage, the process is only beginning. Whether or not you are required to cross-qualify with another mortgage lender or if you just want to shop around for the best rate, you’ll need to lock in your mortgage during your escrow period. However, there is always the possibility that you won’t be able to acquire financing at the kind of terms you are comfortable with.
For instance, you might not ultimately qualify for a loan or get the interest rate you have in mind. If you can’t qualify for a mortgage, or if the terms are unacceptable, you should be prepared to walk away. The last thing you want is to get stuck with a mortgage you can’t afford because you accepted unfavorable terms.
Your appraisal may not be high enough to justify the offer price of the home.
You will also have the opportunity to appraise the home. In some cases, you will find that the home is worth less than the price accepted by the seller. If the difference between the home’s value and the sales price is significant, you should see if the seller is willing to lower the purchase price for the home. If not, you’ll have to come up with the cash to make up the difference between what you offered and what the house appraises for. Otherwise, you’ll have to walk away.
In some cases, the seller might work with you. Your Realtor can help you negotiate this request. If the seller is willing to lower the price after a low appraisal, a real estate agent can handle the negotiations for you. Your Realtor can negotiate for the Seller to buy a home warranty in lieu of paying for certain repairs.
A Closing Date Is A Moving Target
Be prepared for the closing schedule to shift. In the majority of cases, your closing schedule will change at some point based on what you find during the inspection process, as well as how quickly your loan application process goes. The only exception is if you are buying a new construction with no issues. Be prepared, but don’t let it frustrate you.
The Closing Schedule Explained
Here is the timeline you can expect after your offer is accepted:
1. Offer accepted: The moment the seller formally accepts your offer. Celebrate!
2. Transfer initial deposit: After your offer is accepted, you will have from one to three business days to transfer the earnest money deposit. Typically, the earnest money deposit can be whatever is negotiated in the offer contract of the home purchase price.
3. Complete all inspections: During this process, you’ll inspect the home for structural issues. You will have a due diligence period to do this in.
4. Appraisal deadline: Your lender will typically schedule a certified appraiser to evaluate the property. Usually the appraisal will be about two weeks after the offer is accepted. Could be longer if you have to have to use any special loan which requires a specific appraiser.
5. Loan approval deadline: This is important for both sides. As a buyer, you want to know the terms of the loans available to you. The seller wants to know that you have the financing to afford the purchase. In the offer contract, there is financing contingency period. If your lender doesn’t approve your loan, you can cancel the purchase before this deadline.
6. Final walkthrough: During the final walkthrough, you’ll be able to make sure that the home’s condition hasn’t changed since your last visit or the Seller has done the repairs that were necessary to the home.
7. Sign and transfer funds: During this step, you will sign all of the loan and closing documents and wire transfer the rest of the down payment into the escrow account. In Georgia, unless specified in the contract, the closing attorney represents the mortgage bank or investor and is obligated to explain everything to both buyer and seller during Closing. Once your closing attorney verifies the transfer of funds, you are the new owner. The escrow ends at this time and the keys to the home are handed to you.
8. Closing and recording of title: In this final step the county clerk date-stamps and records the property deed and the property legally shows that the property has changed hands. This is the public notice of sale.
Once you’ve completed this timeline, you have finished the home-buying process and are now officially the owner.