January 14, 2020

I Found My House! Now What?

By Jessica Elgin

 

The buying process can be very stressful. It may seem like finding the perfect home is the hard part, but really, that’s just the beginning. Once you’ve made your offer, you may feel a little lost. You may feel unsettled about whether your loan will close or wonder when you should start packing. With so much uncertainty, it’s not hard to see why most people are asking, “What’s next?”

 

There is a lot to get done in the period between your offer being accepted and closing on your new home, but the process doesn’t have to be overwhelming. Understanding the steps that need to be taken will help ease that stress. And having a good realtor at your side can make all the difference in the world.

After an offer is accepted, there are a few things that need to happen immediately.

 

  1. The earnest money deposit check needs to be secured. This money goes to the title company and will be put toward your closing costs. If you decide to back out of the contract, you will lose the earnest money. However, there are ways to protect your earnest money. I call these “safe islands.”

 

  1. A copy of the contract should be sent to both the lender and the title company. This will be done through the real estate office. The lender will then send an updated pre-approval letter, which can be sent to the seller’s agent.

 

  1. The home inspection needs to be scheduled. It is important to do this as early as possible. If something is wrong with this house, you want to know early in the process. At this time, I also find it useful to have a moisture test done. This test can detect signs of mold. A termite inspection should also be done. We are looking for any reason we may not want to keep the house. 

 

During the next few weeks, you will have several opportunities to confirm that this is the right house for you while still protecting your earnest money. You can do this through three safe islands that are stated in your purchase contract.

 

The first safe island is the seller’s due diligence period. During this period of time, the seller will provide disclosures that describe everything they know about the house. If any of these are unsatisfactory to you, you can pull out of the contract without losing your earnest money.

 

The second safe island is the buyer’s due diligence period. This time typically runs a week or two past the seller’s due diligence period. During this time, you want to get all of your inspections done. Make sure that you are completely satisfied with the physical condition of the home. Any repairs that you would like to have done by the seller should be requested with an addendum to the contract. If you are unsatisfied with the resolution from the sellers, you may pull out of the contract without losing your earnest money deposit as long as it is before the end of your due diligence period.

 

Your third and final safe island is the financing and appraisal deadline. If you decide that you are unhappy with the loan for which you qualify, even if it is the same loan that you agreed to in the beginning, you may pull out of the contract without losing your earnest money deposit. 

 

It’s important to note that if you pull out of the contract, it needs to be done in writing. As buyers, it is also important for you to be responsive. There will be requests for clarifying information from your lender and the seller. Being unresponsive or failing to follow through can result in the loss of your earnest money or even the loss of the house. An experienced realtor will help you navigate this period of the process, let you know what to expect, and get you across the threshold of your new home.

 

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