What is the Process After a Contract is Signed?
The time between signing a contract and closing a sale is a busy one for buyers, their real estate agents and the title company. Your agreement of sale is signed and the home selected is officially under contract. Now it’s time to satisfy all the terms of your contract. The seller has relatively little to do at this point. The buyer and the agent, on the other hand, will be very busy for the next four to eight weeks as they work toward closing.
- If the buyer is not paying cash, they must apply for financing within the period of time specified in the sales contract. The earlier the application is made, the better. That way, if the lender requires additional documentation later in the underwriting process, the buyer is more likely to have time to submit it well in advance of closing. This time can vary greatly depending on the lender so getting all necessary paperwork in as soon as possible is a must.
- If the buyer chooses to purchase a condo, there are certificates and addendums that are specific to the sale. A local Realtor that has experience in this area is your important. There is a condo declaration that will be provided to you. It will lay out the rules and regulations for that particular building. The Resale Certificate for that Homeowner’s Association will tell you about that association. It will give you the budget, an insurance summary, disclosure of any pending assessments or lawsuits, and information about who to contact in that building for HOA information. We do advise our buyers to contact the President of the board or the building manager to ask questions about the property. All of these documents are unique and will probably require some explanation from your Realtor.
- If the buyer elects to have the home inspected, the inspections will be ordered very shortly after the contract is signed. The inspector will examine the structure of the building and determine whether or not the home’s systems — electrical, plumbing and heating/cooling — are functioning properly. He’ll also look for signs of poor drainage. Water and air quality tests also may be done, and the inspector may look for signs of termites, too.
- If the inspections show that repairs need to be made, the agents will help the buyer and seller negotiate a solution. The buyer may agree to to accept the house as is, for example, or the seller may agree to do some or all of the repairs or reduce the sale price so that the buyer can make the repairs later, after closing.
- The buyer’s title company will investigate the home’s chain of ownership to determine whether or not another party has any claim to the property. If another party does have claim, the title company will work to clear the title. However, the only guarantee of a clear title is title insurance. If the buyer is borrowing money to finance the purchase, her lender will require that she order title insurance on its behalf. The title company also may conduct the closing. If so, the title agent will work with the buyer’s and seller’s real estate agents and the mortgage consultant to collect the information they need to prepare closing documents and distribute money from the sale.
- If the buyer is financing the home purchase, his lender will require that he take out homeowner’s insurance, sometimes referred to as hazard insurance, for the sake of protecting its investment. Although the buyer isn’t responsible for insuring the home until closing, it’s prudent to start shopping for a policy early, as many sales contracts are contingent on the home being insurable. If the condition of the home makes it uninsurable, it’s better to know sooner rather than later. In Texas, a lender will require that you provide flood, windstorm, and homeowner’s policies. They can vary greatly depending on the area you have chosen.
- The transfer of ownership from the seller to the buyer occurs at closing. The closing is scheduled as soon as all the terms of the agreement of sale and all the conditions of financing have been met. When the parties arrive at closing, the seller still owns the home. When the parties leave the closing, the buyer owns it but cannot take possession until this transaction is funded. That means that the title company has paid the seller and recorded the deed. Sometimes, the lenders take an additional one to three days to fund so be sure to check and not assume you can move in that day.
These are the basic steps from a signed contract to closing. There are many variables, emotions, personalities, legalities and new laws each year to complicate this process. Be sure to choose a local knowledgeable and professional Realtor to guide you.