What Happens After My Offer is Accepted?

by on April 21, 2012Shannon O'Brien

accepted offerAfter all the back-and-forth on price, concessions and repairs, it’s finally over and your offer to purchase the home was accepted. While you may think that your work is done at this point, think again.

Granted, you and the seller are no longer front and center on the home purchase stage; there are some details you’ll need to attend to after the offer is accepted. For the most part, however, this is the point where real estate agents really earn their money and a good one proves that he or she is worth every penny.

Transaction Coordinator

Most large and many small real estate brokerages employ a transaction coordinator. This is the person who coordinates all of the details on the road to the close of escrow.

Once you sign the purchase agreement and hand it to your agent, she will return to her office, check it over for accuracy and ensure signatures and initials are in the proper places, and then either do all the rest of the work herself or hand the duties off to the transaction coordinator.

Escrow Opens

Quite simply, escrow describes a holding of funds or other items by a neutral third party to a transaction until they are distributed according to the principal parties’ instructions. In the typical residential real estate transaction, the principals include the seller, buyer and lender.

To open escrow, the agent or the transaction coordinator calls the escrow officer, typically employed by an escrow or title company, to arrange delivery of the purchase agreement and your good faith deposit.

This is the point at which the clock begins ticking toward the closing date specified in the purchase agreement.

By the way, not all states use escrow. In non-escrow states, a real estate attorney handles these duties.

Title Company

The next step in the process is to order a title search on the property and the issuance of a Preliminary Title Report. This is delivered to the escrow holder who checks it over for any issues not addressed in the purchase agreement. A common item found in a preliminary title report is a lien or an additional loan on the property that wasn’t previously reported to the buyer. This is brought to the attention of the buyer and the seller must clear the cloud on the title or the buyer can cancel the agreement.

Demands

The escrow officer then sends the lender a demand for the pay off of the seller’s loan or a beneficiary statement if the buyer is assuming the loan or purchasing the home “subject to.”

Contingency Removal

While all of the above is happening on your behalf, without your involvement (other than to review the Preliminary Title Report and sign off on it), the next step in the process requires your involvement.

It’s time to remove the contingencies in the purchase agreement. Contingencies are events that must occur, according to the date listed in the contract, before the sale can close. Typical contingencies include:

  • Final loan approval: Failure to obtain a loan will kill the deal.
  • Inspections: Repair issues that arise from the home inspection are typically open to negotiation between the sellers. If the seller refuses to remedy any concerns, you have the right to cancel the contract with the full return of your earnest money deposit.
  • Home sale: The successful sale of your current home.
  • Appraisal: If the home fails to appraise for the amount you are borrowing from the lender, you can negotiate with the seller for a lower price, pay a larger down payment or walk away from the sale.

Once the contract contingencies are removed you can still walk away from the deal but you will forfeit your earnest money deposit and be liable for liquidated damages if your contract includes such a clause.

Homeowner’s Insurance

After contingency removal, act quickly to secure your homeowner’s insurance if you haven’t yet done so. Do some comparison shopping because the cost can vary widely among providers.

After contingency removal, act quickly to secure your homeowner’s insurance if you haven’t yet done so. Do some comparison shopping because the cost can vary widely among providers.

Final Walk-Through

The final walk-through is typically scheduled within the week leading up to the close of escrow and is your opportunity for one last look at the house. This is not the time to bring up new issues, but to ensure that the home is in the agreed-upon condition before you purchase it.

Take your time and do a thorough inspection of the home. Here are a few things to look for during the final walk-through:

Repairs – Did the seller perform all repair requests to the specifications outlined in the contract? If you require working utilities, such as water, gas or electricity to check the repairs, and those services have been disconnected, don’t close escrow until the utilities are turned back on and you’ve inspected the repaired items.

Condition – Is the house in the same condition as when you signed the purchase agreement? Look for damage to walls, carpet, etc. that weren’t there when you agreed to buy the home.

Junk – Inspect areas where the seller may have stashed unwanted items, such as the attic or basement. The seller or his agent, before the close of escrow, should remove all seller belongings from the house.

Appliances – Check that the refrigerator and freezer are cold and run the dishwasher through an entire cycle. Check the garbage disposer to ensure that it’s in working order. Turn on the oven, broiler and stove burners. Check that the built-in microwave works.

Major systems – Flush toilets, turn on the hot water tap, and turn on the heater and then the air conditioner. Flip all the light switches to make sure they are in working order.

Cleanliness – If you requested that the house be professionally cleaned, check inside cabinets, cupboards and drawers and behind doors. If you did not make such a request, you are within your rights to request that the home be at least broom-swept before the close of escrow.

Exterior – Check the following systems to ensure they are in working order: irrigation, pool or spa pumps, heaters, timers and lights.

Unfamiliar pool, spa and irrigation systems can be confusing to new homeowners. Ask that the sellers leave all the instruction manuals for you. If they neglect to do so, ask your agent to retrieve them from the seller.

Miscellaneous – Sometimes small but vital items are overlooked. Make sure that the automatic garage door openers were left on the property. If the mailbox requires a key, ask your agent to ensure that it will be available with the house keys when you close escrow. The seller should leave gate codes, security system codes and manuals and instructions for any custom features.

Settlement Statement

The Real Estate Settlement Procedures Act (RESPA) dictates that the parties to the transaction must receive the settlement statement (typically called the HUD-1) within 24 hours of closing. This statement is an itemized accounting of all charges imposed on both parties. These charges include the real estate broker’s fees, your earnest money deposit, appraisal fee, transfer taxes, loan payoff and more. The statement clearly outlines from whom the money is taken and to whom it is credited.

Go over the HUD-1 with your attorney or real estate agent, checking it carefully for errors.

Closing

Who appears at the closing varies by region. Typically, the buyer and seller and their agents or attorneys attend the closing as well as the escrow agent and a notary public. Sometimes the lender will send a representative.

What to Bring to the Closing

The escrow officer can answer any questions you may have about what documents to bring to closing. The following list does not cover everything, but here are the basics of what you will need to bring with you:

  • Photo identification for each party to the purchase
  • Homeowner’s insurance policy and proof of payment for it
  • Certified check for all monies you are required to pay at the closing

Be prepared to sign more papers than you ever imagined it was possible to sign. When all is said and signed, however, you will be handed the keys to your new house. Welcome home!

{ 4 comments… read them below or add one }

Mario Quintanilla July 18, 2014 at 5:50 pm

Very good advise for first time home buyers.

Reply

Johan November 19, 2013 at 5:06 am

Very thorough. Great advice.

Reply

Eric April 23, 2012 at 12:46 am

Great information for our clients

Reply

J April 22, 2012 at 3:08 pm

Very useful information .
Thanks

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