Under Contract: What Now?

Congratulations, you are on your way to owning your very own home! Follow these suggestions (and your Realtor's advice) so that escrow and settlement go as smoothly as possible.

You will be asked for a earnest money on the home you are purchasing. You can choose to put down as much or as little as you want (your trusted real estate advisor can help you determine the amount). Remeber that the more you put up for earnest money the more enticing your offer will be to the seller.

During this period of purchasing your home, you are going to need settlement company to act as an independent third party handling the closing of the transaction. The settlement company will hold your earnest money and coordinate much of the activity that goes on during the settlement period. This earnest money check may also be held by an attorney or in the broker's trust account. Make sure that there are sufficient funds in your account because this check will be cashed.

 Assuming the sale goes through, your earnest money will be applied as a credit to you at closing on your settlement statement. In some instances if a sale falls through you may be entitled to receive all or some of your earnest money back. However, there are some times where the seller may be able to keep this money as liquidated damages. Prior to writing an offer, make sure you discuss the details of the purchase agreement with your real estate agent.

The period that you are "in escrow" is often 30 - 45 days, but may be longer or shorter. This is the time that each item specified in the purchase agreement will be completed. By the time you have ratified your purchase agreement, you will have come to an agreement with the seller on the closing date and other contingencies. Each contract is different, but most include the following:
1. Inspection contingency: you will agree on a set number of days that you have in order to have the home inspected and request any deficiencies be fixed. If you are unsatisfied with the results of the inspection and unable to come to an acceptable agreement with the seller you may want to cancel the contract so you MUST make sure you complete the inspection period as it is agreed to in the purchase agreement.
2. Financing contingency: The purchase agreement outlines the time that you have to solidify financing. If, you are unable to secure financing during the period of time specified in the contract (and the seller will not provide a written extension of time), you must decide whether you want to remove the contingency and take your chances on getting a loan or you may choose to cancel the purchase contract. This is why it is very important to be pre-approved with a trusted local lender before you start your house search. 
3. A requirement that the seller must provide marketable title. An attorney will provide a title report. The title must be "clear" to ensure that you do not have legal issues regarding your ownership. 
4. Secure homeowner's insurance. This will be required before you can close the sale if you are financing your purchase. It is a good idea to apply for insurance soon after your purchase agreement is signed by all parties. It can take some time to find insurance and it is wise to shop around.  
5. Contact local utility companies. You will do this about 2 weeks before closing to make sure that utilites are turned on when you close on your home. 
6. Schedule the final walk-through inspection. You and your realtor will walk through the home a day or two before closing to do a final inspection. If you are not purchasing a new construction home you are not looking for the home to be in perfect condition. The home should be in the same condition it was when you wrote the offer on the property and no fixtures have been removed. If there are any issues they need to be addressed prior to closing. 

You have made it! Once the sale has closed, you will be the proud owner of a new home. Congratulations!

If you have questions or are ready to begin the home buying process, just complete the form below, and a member of our team will be in touch shortly!


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