Every single real estate transaction varies in one way or another. That being said, there are several main components that must take place in order for it close properly and on schedule. Whether you are a buyer or a seller, these critical steps include:
Mutual acceptance | The first step is mutual acceptance to the terms of the offer between the buyer and seller. These terms include, but are not limited to, sales price, earnest money, personal property, closing date, possession days, etc. Once these terms are mutually agreed upon by both parties, the transaction can move forward.
Earnest Money | As previously mentioned, earnest money is a good faith check that the buyer will deposit once mutual acceptance is reached. These funds are deposited in a third party escrow account and, if the transaction closes, applied towards the buyer's down payment. The only reason why a buyer would lose their earnest money deposit is if they terminate the transaction outside of the three contingencies; inspections, appraisal, financing.
Inspections | Day 1 of the buyer's inspection period begins the following day that mutual acceptance is reached. Typically 10 business days, this timeframe is for the buyer to perform their due diligence on the property which typically includes a professional home inspection by a licensed inspector. Researching HOA information, CC&R's, zoning, etc. can also be performed during this time. The buyer may terminate the agreement during this inspection period and receive his/her earnest money deposit back.
Appraisal | An appraisal is, in simple terms, the lender's inspection. They make sure that the property they are lending on is in good overall condition with no glaring issues. An appraiser will also calculate the market value of the home based on the comparable homes that have recently sold in the area. If the appraised value comes in lower than the contract price, the buyer and seller must re-negotiate the sales price.
Final Underwriting | Once the appraisal is complete and returned to the lender, the buyer's file will go into final underwriting.
Signing | Once loan documents are prepared by the lender, the buyer and seller are ready to sign their respective papers. This typically takes place at the designated escrow office.
Closing | Once all the required documents are signed by both parties, the transaction will be funded by the lender and recorded with the respective county.
Keys! | Time to party! The buyer and listing agent will arrange a time and manner in which the keys will be given to the new buyer.
Congratulations! You just bought or sold a home! There are many details within each step, but hopefully this gives you a better overall idea of the process when purchasing or selling a property. If you have any questions, please don't hesitate to contact me. Make it a great day! CHEERS!