Congratulations on getting your home under contract! I’m very excited for you and that we can take this next step in the process. Today I wanted to talk to you about what the next step in the process is and what to expect.
I wanted to remind you as you celebrate to not celebrate too hard, as there is still work to be done and we haven’t closed on your home just yet. We have a saying in the business: “Buyers die, lenders lie, and stuff happens.” It’s a little grim, but it’s the truth. In fact, one out of every 2,000 buyers will die before closing.
While that isn’t usually what causes a home to come back on the market, there are a few other more plausible scenarios. Here are the stats on those: one out of 10 loans will be delayed by lenders and one out of 15 homes won’t close because of an inspection-related issue. Additionally, one out of 75 homes won’t appraise, but I think that number is closer to one out 25 in our area. Finally, one out of 300 loans will be terminated due to job loss.
There are a lot of things that are out of our control that could happen during the next phase of this process that could cause the deal to fall apart. I say this because I want you to be prepared. The next thing that happens is the buyer’s due diligence process begins and they are going to start doing their inspections.
The typical inspections that the buyer will do is the home inspection, termite inspection, and radon test. If the home has a septic or well then they will inspect that, and they will more than likely also do a survey.
“Don’t celebrate too hard; there is still work to be done”
All those inspections are going to take place, and the appraisal will most likely take place in conjunction with that during this period. Once those inspections are complete and the buyer gets all the reports, they will likely prepare a repair request. They’ll send that request to us along with copies of the reports, and we will evaluate that request and see what is and isn’t reasonable.
Whatever is decided on, we need to have those repairs agreed to in writing by 5 p.m. on the last day of the due diligence period. The reason for this is because the buyer’s earnest money goes hard, and if they were going to back out of the deal due to not all the repairs being agreed to, that would be when the earnest deposit becomes non-refundable. In order for this part of the process to go smoothly, we want to get those repairs negotiated as early as possible.
We also want to pay attention to the appraisal, because if the appraisal comes back lower than the contract price, the buyers may want to try to renegotiate that price. Low appraisals are fairly common in our market with as fast as home prices are rising, so we’ll deal with that if and when the need arises.
Once we get everything buttoned up and that due diligence period ends, it should be pretty smooth sailing from that point forward. This is the time where you’ll cancel your utilities and finalize your move. The buyer, though, may request a reinspection of the items you’ve agreed to repair, which is their right.
They will also do a final walkthrough of the home the day before or day of closing. Hopefully by this time you have moved everything out of the home, as this is a great time for the buyer to double check that the home has been left in good condition and that no additional damage occurred during the move.
Assuming everything goes well, that’s the time that we go to closing. Generally, we as your agents will go to closing for you unless you have a burning desire to go. By this point, you will have already gone into the attorney’s office to sign what you need to sign, and then I will go on your behalf to sign the closing statement (that you’ve seen beforehand).
We get out of there pretty quickly, but the buyer has far more documents to sign so it will take longer for them to finish up their part of the closing process.
Once both buyer and seller have signed the documents, the attorney then closes the deal by recording the transaction at the register of deeds. Once the sale is recorded, then the title transfers to the new owner. You are still the owner of your home, even though you’ve signed documents, until that sale is recorded. At that point, money changes hands, keys are handed over, and the buyer can move in.
If you have any questions about this process or you’re looking to buy or sell a home, give me a call. I’d be happy to help you!