So your offer was accepted! Now what!? Now is the time for due diligence and loan application.
1.) Home Inspection – Shortly after written acceptance of your offer, it is important to contact a home inspector and schedule the inspection within 5-10 days or according to your contract. You will need to coordinate the time with your real estate agent. It is recommended that you are present at the home inspection. This can take 1-3 hours depending on the size or scope of the inspection. This will be at your expense, the inspector can vary in cost but is usually between $300-$500. The buyer is always encouraged to have a home inspection to verify the condition of the property.
After the inspection, you have the choice to
- Remove inspection contingency and move forward
- Negotiate a price reduction, repairs, or a credit due to items on the inspection report. All of these items must be mutually agreed upon
- Release of contract due to condition
What happens if we choose to back out of the contract after the inspection? You will need to come to an agreement with the seller to part ways, in most cases you are entitled to your earnest money deposit.
2.) Submit Earnest Money – Typically this is a written check made out to the Real Estate Brokerage in the amount of 1% of the purchase price. This is collected at the time the offer is written or within four days of acceptance or after inspections. Earnest money is a good faith deposit to prove you are a serious buyer, this will be credited towards your down payment at closing.
3.) Loan Application – At this time you will contact your lender and let them know you have an accepted purchase agreement. You or your agent will submit the contract to your loan officer and get the process started on obtaining the loan on your home. At this time, the lender may ask you to pay the loan application fee, which is typically under $500, but contact your lender for the exact amount. You also will begin to look for homeowner’s insurance as it is required to have purchased a policy prior to closing on the home.
4.) Title Search – Handled by the title company to verify the property title is in good standing without any liens or encumbrances.
5.) Appraisal – This will be ordered through your lender and coordinated between the listing agent and seller for the appraiser to walk through the property. You are not required to be present but will receive a copy of the report once it is complete. The appraisal process is used to verify the home’s value and prove to the bank that the home is worth the loan you are obtaining.
6.) Final Loan Approval – The loan is now out of underwriting and the lender is working with the title company to prepare for closing. At this time you will have one final walkthrough prior to closing to verify the condition of the home. It is important at this time to schedule and transfer the utilities for the date you are scheduled to take possession.
You are now ready to head to closing!
