FROM CONTRACT TO CLOSE
You have worked hard, now it is time to finish well…
Congratulations! You have a contract on your home! Your buyers have seen a lot of homes. In fact, they have probably been looking for three months or more. So their desires zeroed in on your home. There are some simple steps to take now that you have made done all that was neccessary to market your property. It starts with negotiating the offers you have and ends with the closing officer handing your the proceeds of the sale of your home!
All valid offers in real estate must be made in writings. The best and simplest way for a buyer to make an offer for a property is simply to write a contract. The buyer then executes thier side of the agreement hoping the seller will agree and sign their side. You may recieve multiple contracts and you will need to decide which one is best for you. Once deciding on which offer is most fit, you will lay the others aside and engage in a negogiation. We will deliver offers to you electronically via email.
Negotiating Sale Price & Terms
A real estate transaction can be negogiated three times before closing. First, during the offer stage. Then upon inspections. And a little more rare, but if an appraisal has repair requirements. It is possible to have other negogiations but it is important for both buyer and sellers to be aware of when during a contract negogiations take place. At this stage the major items to be negogiated are sale price, the closing date, earnest money, the length of inspections, additional items (i.e. an existing refrigerator) and a residential services agreement. Once you decide on which offer, we will engage the winning buyer with your choice with your decision and/or your counter offer.
Executing the Contract
When negogiations are complete, you will execute the agreement with any changes via email and we will deliver it to the buyer in a prompt fashion. As the listing agent, we will then changes the status of the home in the MLS to “pending” and no other buyers are able to walk through the property.
During this stage, usually ten days, the buyer has the opportunity to throughly inspect the property. The buyer must be accompanied by a licensed real estate professional if the owner is not present. Inspections can range from the buyer simply looking over the property themselves to licensed home inspectors, electricians, plumbers, heating and air professionals, pest inspectors, mold, lead based paint and others.
Once inspections have taken place, they will provide for the buyer a report of items that they found. They will reveal any and all possible concerns with a property. There job is not to provide the buyer with a list of repairs that the buyer gets to demand of the seller. There job is simply to reveal any and all situations related to the property. This now becomes a negogiation. With an older home, there is typically a longer list. Once the list is recieved, the buyer has the option to ask for a repair of any defect “outside of normal working order”. If something is aesthetically displeasing but works well, that does not qualify. An item must not be working if one is to ask the seller to respond to it. The buyers then submit this to the seller on a form called the TRR (short for Treatments, Repairs, and Replacements.) Once buyers and sellers agree to the repairs to be made, the seller has up until closing to address the agreed upon list.
As soon as the inspections are done, it is appropriate for buyers to immediately order an appraisal. Typically buyers will order the appraisal through thier mortgage lender. If a buyer waits too long, this could delay closing as a lender will not issue clear to close unless the property appraises at or above the agreed upon sale price. The appraisal tells the bank if it is a safe bet for them to loan money against the property. If the buyers loan program is FHA or VA it is common for the appraiser to have repair requirements. If these repairs are costly, a renegotiation of sale price maybe in order.
Receiving Clear To Close
“Clear to Close” is an official term lenders use to let all parties know that they will fund a loan for the purchase of real estate. It is a joyful moment to hear those words, especially for seller! Certain rules dictate that this official distinction will not be made until three days prior to closing. This distinction lets sellers know it is safe to move from the property. If you are trying to time your move with the availability of funds from the proceeds of a sale, a seller is taking a risk to make financial purchases prior to actual closing. The issuance of clear to close is the best possible distinction to trigger an actual move.
This walkthrough is where the buyers confirm that they sellers executed upon all of the agreed upon repairs. In addition, they are keeping a close lookout for any additional defects that may have taken place in the period between inspections and closing. At any given point a buyer can simply decide not to purchase the property. They may forfeit their earnest money in certain situations but none the less, the choice is theirs. For this reason, sellers are motivated to do repairs well. Buyers are motivated to recieve a home in the agreed upon condition. This walkthrough of the property is typically done a few hours before closing.
Closing typically takes place at the buyer’s title company. Seller’s have the option of signing their documents up to three days prior to closing. It is now common to the buyers and sellers to not actually ever meet at closing. The lender sends all of the neccessary documents for the loan, in addition to the closing company provides the deed, any title insurance, home warranty documents etc into a “CD”. This is the packet the sellers will methodically sign in front of the closing officer. Once all documents are executed by all parties, the keys, gate codes, security codes and garage door openers are handed over to the buyers and the proceeds of the sale are handed over to the seller!