The Buying Process: Contract to Close

By on November 4, 2014. Posted in , .


So, you’re looking for your dream home. Let us be the first to say congratulations on this big step! Understandably, there are a number of questions that come with this search and especially when it comes to the buying process. Lucky for you, at Roots Real Estate we know the lingo and how to navigate our way through these waters. So sit back and relax. We’ve broken down the buying process into this simple explanation that covers the basics. Think of it as your map to the closing table.

Budget Exploration
What’s a map without a little exploring? As adventurous as you may be you’ll want to contact a reputable lender to determine your budget. Ask your Roots agent for a few lender recommendations if you need help getting started. After reviewing your loan application, your lender will help you set sail by defining your budget parameters and providing you with a preapproval letter. This letter, when sent in conjunction with an offer, is comforting to the sellers and suggests that financing has been thoroughly secured.

Choose an Agent
Have no fear! Roots is here! We are committed to making sure our clients are heard and that each client receives the highest quality of service.

The Quest
Go back to your childhood years of searching for buried treasure in the backyard. The anticipation and excitement that you had digging holes or looking under the swing set are the same feelings you will experience when searching for your new home. Your home search has the most variable timeline during the buying process, but remember how I said, “Have no fear. Roots is here!”? This is where we step in and help narrow your search by showing you only properties that genuinely fit your wants and needs.

The Offer
Once you’ve found your new home you’ll work with your Roots agent to begin the official offer process. Your Roots agents will write the offer and review it with you before submitting it to the sellers. The seller will usually counter and negotiations can go back and forth until both parties agree. If an agreement cannot be reached then the offer is considered void with no financial repercussions to the buyer.

Once both parties have agreed to the terms of the offer, by initialing and signing it, the contract is now considered “executed”. The buyer’s agent delivers the earnest money and contract to the title company where it is held in an escrow account and the closing process begins. The option money is also delivered to the seller at this time.

The Title Company
Moving onward, the Title Company will send the executed contract to the buyers, sellers and agents involved. From this point forward the title company will act as a liaison between all parties involved. The title company will also ensure that the title to a property has no claims against it and can be freely transferred from the seller to the buyer.

The Option Period
Typically the option period is between 7 and 14 days and this is the time where the inspection is completed .Buyers may also reserve the right to cancel the contract for any given reason. Option period fees can range from $100-$1,000 depending on the asking price and current market conditions. In almost all cases the option fee is credited to the buyer at closing. If the buyer chooses to terminate the contract within the option period, the option fee is forfeited and the earnest money refunded.

Buyers should schedule the inspection with the inspector of their choice upon the execution of their contract. This is another time you should feel free to ask your Roots agent for a little help if you need it. The inspector examines many facets of the home including, but not limited to: plumbing, electrical and main structural systems of the home. Inspections normally take two to four hours to complete depending on the square footage of the property, and the full inspection report is generally received within 24 hours. The cost of an inspection can vary but is usually between $250 – $500 and is paid for by the buyers.

Assessing the Inspection
After reviewing the inspection the buyer and his or her agent will determine if any items need repair. Inspection reports can seem as intimidating as a kraken. Well, maybe not that intimidating but you get the picture. Your agent will help determine what is significant and what is merely cosmetic. Repairs are negotiable and need to be agreed upon by both the seller and the buyer. Additional documents will be signed and executed if and when any agreements are made.

What’s my home worth? It’s a buzz worthy question and a really great show on HGTV. To determine the answer to the question an appraisal will be ordered on your behalf by the lender after the option period is over. The buyer is responsible for the cost of the appraisal (usually between $300-$500) which should be included in the lender’s good-faith estimate.

Loan Processing
During this time buyers will be in frequent contact with the lender. Providing all required documents as quickly as possible will keep the process moving forward smoothly. No need to send these documents by sea in a gem colored bottle as email/fax or phone calls will work just fine.

Clear Waters
Once the underwriter is satisfied with the buyer’s information the lender issues a “clear to close”, sends the documents to the title company, and the closing is scheduled. Go ahead and start packing….your move date is right around the corner!

Final Walk-Through
Within 24 hours of closing, your Roots agent will schedule a final walk-through of the property to ensure that any negotiated repairs have been made and the home is in satisfactory condition.

ClosingGetting the Keys
Once the title company receives the necessary documentation from the lender they will set appointments with the seller and buyer to sign documents. These generally happen on the same day but not always at the same time. The seller’s appointment often takes 30 minutes or less. The buyer’s appointment takes about an hour. After everything is signed the lender must still approve funding before the buyer is handed the keys. The title company will send all the documents to the lender for final approval. Once the lender has issued final approval the transaction is considered “funded”. Keys are released to the buyer and proceeds are distributed to the seller.

It’s yo-ho-ho and a bottle of rum time. Breathe easy and smile as you start a new adventure in your life.