What to do after you are in contract?
Your agent should supply you with a calendar timeline within 3 days of going into contract. We have attached a copy of our calendar timeline for reference.
Your agent will shepherd the timelines of the contract, but it doesn’t hurt to know what is going on.
1. In the purchase contract you agreed to make an Earnest Money Deposit which goes into an escrow account. It is your job to get the money to the escrow company in the time specified in the contract, usually 3 business days. The accepted and most common method is through wire transfer. You have the option of delivering a check to the Escrow Company yourself if you prefer. Wire fraud is a major concern in real estate. Do not accept wiring instructions through the internet. Contact the title company directly and verify the routing numbers for sending your wire. Your agent will help you with this.
2. You likely made an offer with Contingencies**. Those contingencies must be removed in writing within a specified number of days. (refer to your purchase contract for the time period) Within 5 days you should, if you haven’t already, receive a disclosure package with all inspections, disclosures, preliminary title report, easements and other information about the property. If the property wasn’t pre-inspected, your agent will help you order inspections. Read and review this information thoroughly with your agent. If you aren’t comfortable with anything, ask questions. FYI, as a general practice, we recommend you get your own inspections, even if they have been supplied by the seller. At the very least, request the inspectors come back out to the home and go through the inspections with you - especially if you don’t understand or are uncomfortable with something. All of the inspections combined are usually under two thousand dollars. When you are spending a minimum of 800,000 to purchase a home in our area, that is a small price to insure you have the best information available on the home. It is wise to contact your insurance agent during this stage to get quotes on Homeowners Insurance. Insurance is required by your lender and you will need a binder before the signoff.
3. Your lender, if you are financing the purchase, will require an appraisal of the property to ensure the value is there. The lender will order the appraisal and you are generally not present during the appraisal. In addition, your lender will finish their evaluation and give you loan approval.
4. You release your contingencies: Contracts can be contingent on many things. The most common contingencies are:
1. Buyers ability to secure a loan - Known as Loan Contingency
2. The home appraising for the purchase price – Known as Appraisal Contingency
3. The Buyer’s physical inspection of the property and any other inspections other than a physical inspection – Known as Buyer’s Physical Inspection and All Buyer Investigations other than physical inspection
4. The Buyer reviewing disclosures made by the Seller or companies they have hired to disclose – Known as Reports/Disclosures
5. Reviewing the Preliminary Title Report – Known as Title: Preliminary Report
6. If the property has a Homeowners Association you would review the documents explaining the HOA – Known as Condominium/Planned Development (HOA or OA) Disclosures
What happens if you have a problem with one of the contingencies? Your agent will guide you through that process. Sometimes homes do not appraise for the price a buyer offered. Sometimes you find issues upon inspection: Termites, broken seals in windows, roof repairs needed etc. If you find the home has issues you wish the seller to remedy, such as termites, you can make a request that they repair or correct those items before releasing contingencies. Once you release contingencies you have no leverage to ask for repairs or changes. Releasing contingencies is a big deal because you Earnest Money Deposit is at risk from this point on.
5. The Sign-off generally takes place at the escrow company but is also done with a mobile notary at your home or business. It happens once your lender has sent the loan documents over to the Escrow Company. You, your agent and your Escrow Officer sit down and sign the final paperwork. Prior to signoff it is customary to do your Final Walk Through of the home to make sure it is in the same condition as when you made your offer on the home. You will need proof of who you are – passport or driver’s license, to signoff. After the signoff is a good time to call to set up the transfer of all utilities into your name. The Escrow Officer will provide you will the final dollar amount you need to deposit into the escrow account to close escrow. Wire fraud is a major concern in real estate. Do not accept wiring instructions through the internet. Contact the title company directly and verify the routing numbers for sending your wire.
6. Take Possession: In Northern California, taking possession is rather bland. Your lender has funded the loan, you have wired your money into the escrow account. The night before it is due to close, the Escrow Company declares All Funds are in and releases the deed to be recorded with the County early the next morning. The close of escrow day, your agent receives a call from the Escrow Company saying the deed has gone from Seller’s name to Buyer’s name -also Known as Recorded and it is yours. Your agent picks up the key and delivers it to you. A quiet end to a very BIG process.