You have exhausted all efforts to sell your home. You have now completed the procedure and reached an agreement. What occurs after accepting the buyer’s offer?
- You or your agent will initiate escrow with an attorney or title business. They will evaluate and insure the property’s title, as well as manage the property’s records.
- The purchaser or mortgage lender will require an evaluation (and complete the mortgage approval if needed)
- Before closing, the buyer will likely request a house inspection and conduct a final walk-through.
Your purchase agreement should provide a schedule for these occurrences. To keep your sale on schedule, you must be mindful of meeting deadlines.
Offer + Acceptance = Only the Beginning.
If you accept the buyer’s offer, it is OK to rejoice. As a property seller, you’ve cleared a significant obstacle; closing is next.
Understanding a real estate acquisition agreement is related.
When a purchase offer is accepted, the selling process undergoes an immediate and significant alteration. On your journey to the promised land of peaceful closings and large settlement payments, there has been an offer and acceptance, a convergence of ideas.
However, you still need to arrive. Several possible landmines must be crossed. Maintain a record of all deadlines. By failing to tell the buyer that they have missed a deadline and is “out of contract,” you may inadvertently forfeit your legal rights.
What Happens After I Accept the Offer
If you examine the contract between buyer and seller, there is a good chance that the agreement is still being determined. It is a “contingent” arrangement, implying a transaction will occur, but only if certain conditions are met before closure.
So, what should be done?
There is no such thing as a “standard” contingent contract, as there are several possible variations. There is a possibility that the agreement between buyer and seller is one-of-a-kind, but it most likely includes at least some of these shared understandings.
Closing Date
After accepting the buyer’s offer and closing the purchase, you must vacate the property and leave it in pristine condition. Typically, sale agreements include a closing date on or before a particular date. You must adhere to this due date.
If sellers delay the closing, the buyer may lose the ability to lock in an interest rate. A delayed settlement may leave you without sufficient finances to purchase a substitute home. In summary, be willing and able to move when necessary.
Deposits
Only some vendors would accept offers with a good faith deposit. After accepting the buyer’s offer, you, your broker, or the title firm should receive this deposit. It serves as evidence of the buyer’s intent to complete the sale and may compensate you if the buyer backs out.
And even that may not guarantee the buyer’s ability to close – sellers should inquire if the check bounced.
Typically, the broker holds the money in an escrow (trust) account. In the event of a disagreement, brokers would often turn the funds to the court if they could not get a release and cancellation from both parties.
Financing
Typically, if the transaction is to be financed, the buyer must apply for financing within a certain number of days, say five or ten.
Typically, there will be a date by which the buyer must get mortgage loan approval and provide evidence in the form of a mortgage credit approval or pre-approved letter.
If no mortgage is involved, the buyer must provide “proof of funds to close” by a certain deadline.
There may also be deadlines for ordering, receiving, and approving assessments. Check your agreement thoroughly, note any deadlines, and follow up with your buyer (or have your agent do so) to ensure that everything is proceeding as planned.
Fixtures
A “fixture” is often described as something affixed to the property and intended to stay after the sale. If not attached, it is considered personal property, sometimes known as “personality.”
Generally speaking, a built-in microwave is considered a fixture, but a countertop microwave is considered personal property.
Work with your broker at the time of listing to determine which items are fixtures and which are not. If you truly desire the washer and dryer, describe them as “personal property” or something you take with you when you move.
Additionally, avoid taking anything that the buyer expects to be there. If you classify a swing set as a fixture, it must stay on the property. Refrain from disassemble and transporting it.
Property insurance
Do not cancel your insurance on the settlement date. The settlement might be delayed. Consult your insurance agent to extend coverage for several days beyond the closing date. In case the closure is delayed, and you have a valid claim.
If the property floods because a pipe bursts, the insurance provider will cover a significant portion of the costs. Without insurance, you are responsible for the total amount of the bill.
Remedies
If one party or the other adheres to the contract terms, there might be significant complications. The vendor may attempt to retain the deposit and even sue the purchaser. The purchaser may try to sue the vendor. Both parties may seek “particular performance” or a court order compelling a buyer to purchase or a seller to sell.
For instance, a seller in Nevada realized that the property’s appraised value was far more than the amount she accepted from the buyer. You cannot do so after accepting the buyer’s offer. The buyer was forced to hire an attorney to intercede when she attempted to back out of the deal.
Immediately call a local real estate attorney in the event of a disagreement.
Repairs
A vendor may promise to perform repairs or replace equipment as a condition of sale. Regarding your obligations, the agreement should be as precise as possible to avoid disagreements. For example, what dishwasher brand and model is acceptable?
Including a house warranty in the purchase price is one method to minimize problems with appliances that fail shortly after the sale or repairs that don’t last. This insurance coverage covers the replacement or repair of several household systems.
Title
The title must be clear, insurable, and marketable as a condition of the sale. Indicating that the seller has the legal right to sell the residence and that no other parties have a claim to the property.
The closing agent will do a title search to determine what the seller is selling. The agent checks the chain of title (property transactions, liens, and objects that enable others access, such as easements) and searches for faults, such as unpaid liens and uncanceled mortgages.
Mortgage lenders demand title insurance because a title search may overlook problems and certain possible defects are not in the property records (such as a sale by a minor). Likewise, cash buyers are prevalent. If the title is “clouded,” insurance cannot be obtained. The seller must take steps (known as “quieting” the title) to prepare the property for sale.
Walk-Through
Buyers are permitted to inspect the property before the closing. Typically, they require sufficient time for a thorough assessment. Electricity and water must be operational for them to check the area.
A walk-through ensures that the buyer receives the property in the same condition as when the contract was signed. If you dropped your piano down the stairs while moving out, you would be liable for the repairs.
Finally
When you accept the buyer’s offer, a potentially lengthy procedure begins. The closing consists of signing and recording all formal papers, transferring monies, and delivering the house’s keys to the new owner. Your former residence is now the buyer’s new residence.
