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.