What happens after we’re under contract?

The time spent searching for your home can feel like an emotional and physical marathon, so once you have an offer accepted and have an executable contract it’s smooth sailing from there, right? Well… There’s more that goes into it than that.

Those who partake in the real estate close process often consider this to be where the real work beings! After both the buyer and the seller sign the contract to signify acceptance of the terms, two checks must immediately be written by the buyer: the due diligence fee and the earnest money deposit. Both of these amounts are agreed upon in the offer to purchase, and are credited against the purchase price of the property if and when the transaction closes. The due diligence amount is paid directly to the seller (usually as a personal check) and the earnest money deposit is sent to the closing attorney to be held in escrow until the day of closing.

Due Diligence period

Once a contract is accepted by both the buyer and the seller, the due diligence period begins. This is the amount of time you agree upon in the offer to purchase where the buyer has access to the property for inspections including: homeowners’ inspection, radon testing, termite inspection, appraisal, etc. This is also the period of time during which the buyer can elect to terminate the contract to purchase for any reason and lose only their due diligence fee. The amount of money that is held in escrow by the closing attorney will be released back to the buyer if termination of the contract occurs during this time.

After the end of Due Diligence

When the due diligence period ends there will still be time before the property closes and when the buyer takes ownership. During this time period the buyer is still able to terminate the contract, however they will lose their due diligence money and the earnest money deposit with the closing attorney. Both of these amounts will compensate the seller for the termination of the contract.

Prior to Closing Day

Once a transaction has been “cleared to close” by the lender and a closing date has been scheduled with the closing attorney, the last few preparation steps occur, which include: obtaining homeowners’ insurance and transferring all utilities into the buyer’s name, with the effective date listed as the date the property is scheduled to close.

Lastly, is the final walkthrough, which often occurs on the same day as closing. This is the time when the buyer and their agent walk through the property to ensure that there is no major damage to the home, that all of the seller’s belongings have been removed, and that all items that were agreed to convey along with the home are still present before the buyer closes on the home. Once the house is in satisfactory condition the buyer can become the new owner!

Hopefully this writeup helps to shed some light on the process after a home goes under contract. If you have any questions or know of anyone in the Charlotte, NC area that is ready to buy or sell real estate, please don’t hesitate to reach out.

 

What’s your game-plan?

The real estate market in Charlotte has the lowest levels of inventory of homes… EVER. With only 1.3 months of inventory available, while a health amount is considered to be 6 to 9 months of inventory. So, there aren’t enough homes available, most that are put up for sale are selling in a mere number of hours and prices well over the asking price.

So what’s a home buyer to do?

First, be prepared. Meet your real estate agent face-to-face to discuss what the homebuying process is going to look like and let them guide you through the process. Start by discussing your needs for a house, things you would like but are negotiable, and then shop for a lender.

Do your homework. Just because you have a banking relationship with an organization does not mean that they’re going to give you the best rates. Shop around and find the product that works best for you and your situation. Your real estate agent may have suggestions, I have relationships with a handful of local lenders and I give them business because I like how THEY do business and how they take care of my clients.

Know your strategy. With most home sales going into multiple-offer scenarios it’s best to understand how you’re going to make your offer stand out and where your drop-dead point is before you fall in love with a property. What works for you and your finances? What’s your maximum price? What’s your maximum fixer upper threshold? Work with your real estate agent to plan how this all works into your offer. I’ve seen many sellers no longer calling for “highest and best” offers, so it’s advantageous to put your best foot forward as a buyer with your initial offer.

Evaluate. What would happen if you signed, sealed and delivered this offer and you didn’t win? How would you feel tomorrow? Would you wish that you flexed on something? Do you wish you gave up on asking for that $400 home warranty? If so, clean up your offer before it goes out. The less things you ask for from the seller the better off you’ll be.

Have your ducks in a row. This goes along with understanding your offer strategy. Make sure you have proof of funds for any liquid money that you’ll be including in the purchase. And have a pre-qualification letter from your lender, if your lender offers a loan program that looks at all of your income and expense documentation to better ensure that you qualify, do it! And make sure that your agent and the seller understand that you’re already fully underwritten at the time of contract.

Be ready to make a choice. Things move quick, so there may not be days to think about any one decision. So understand what your walk-away point is. Just because a seller counters your offer, doesn’t mean that you have to rise to the occasion. If your best offer was your original offer, feel comfortable and confident in standing by that. If it breaks a deal, than that deal wasn’t meant for you anyway.