Most sellers think that once they have agreed on a price with the buyers and the purchase agreement is signed, that they have a “done deal”. It would be nice if it was that easy, but there are many more steps to get to closing. Most homes are sold with contingencies and if financing is one of them, the closing date is normally scheduled 45-60 days from the acceptance of the purchase agreement. If it is a cash sale it can close as soon as 2 weeks from acceptance.
The next step is to deal with the many different types of inspection contingencies. The buyers usually hire a home inspector. The sellers may be required to have a well and/or septic system inspection. If the property is a condominium or townhome, association documents will need to be given to the buyers for a 10-day review period. If the purchase is for land or lakeshore, a survey, soil tests, or plan approval may be required. All of these contingencies give the buyers an opportunity to cancel the purchase agreement or renegotiate the price or terms.
Once the buyer’s inspection contingency has been removed, the lender hires an appraiser to verify the value is equal to or greater than the purchase price. If the home doesn’t appraise for the purchase price, the buyers may have the opportunity to cancel or renegotiate the price or terms of the purchase agreement.
Even though the sellers receive a pre-approval letter from the buyer’s lender with the purchase agreement, the loan is subject to underwriting approval. Underwriting will review the buyer’s financial information, employment, appraisal, required inspection results, etc. before issuing a “clear to close”.
The title company verifies clear title and works with the seller to correct any issues, then prepares the settlement statement required for closing. Once the settlement statement is approved by all parties; which is usually a week before closing, we are fairly confident that the sale will close.
The buyers walk through the property right before closing to confirm any required repairs are complete and the property is in the same condition as when they wrote the purchase agreement. If everything looks good, all parties head to closing, sign the documents, the buyers bring their down payment, the lender wires the additional funds, the sellers get paid, the buyers get the keys and property is transferred to the new owners.
An experienced real estate agent will monitor and negotiate all of the phases of your real estate transaction to ensure a successful closing.
Ask the Real Estate Agent is a weekly column by Cheryl Kempenich of Coldwell Banker Burnet, who lives and offices in the Chisago Lakes Area. Submit your questions to firstname.lastname@example.org. All information is deemed reliable but not guaranteed. For legal assistance consult an attorney.