Selling or purchasing a home is a process with many stages. Your real estate agent will guide you through the steps regardless of which side of the transaction you fall. Here's a crash course on a couple of key elements to that process.
The Real Estate Contract
Real estate contracts are typically written for real estate boards or brokerages by attorneys. Aside from address, price and closing date, other key pieces of an agreement include a paragraph to detail which fixtures and personal property are included at no cost, all the legalese on transitioning legal ownership, an area detailing how much earnest money the buyer will put down and room for the mortgage loan contingency, assuming it's not a cash transaction.
The Process of Writing and Negotiating a Real Estate Contract
A buyer's real estate agent will sit down with the buyer to decide the price and conditions for their offer to purchase. The agent will then present it to the seller's real estate agent who in turn will discuss the offer with the seller. The seller will then accept, decline or counter the offer. The buyer and seller can make as many counter offers as necessary until they both agree on the terms. Changes from the original offer will be initialed and both parties will sign the contract. To make the contract legally binding it must be signed and delivered to all parties.
Inspection Contingency
Contracts call for a period of time for the buyer to hire and pay for a professional home inspector, usually five to ten days after contract signing. If there are major defects or safety issues found in the home, the buyer typically negotiates with the seller to receive a monetary credit or have these issues repaired or replaced.
Attorney Review Period
If the home sale is in a state that uses attorneys, the buyer and seller both hire an attorney to represent their interests. The attorneys will review the contract and make their suggestions for changes to ensure their client's best interests are satisfied. They have five to ten days after contract signing to do this. This is referred to as an "attorney review contingency" period.
Financing Contingency or Other Contingencies
The buyer will have a financing contingency period, usually three to six weeks, to formally apply for their loan, submit their documents and have the appraisal done. Appraisals are an important piece of the process as lenders want to be sure the home value is in line with the purchase prices on the contract.
Final Walkthrough and Closing
Once all contingencies are cleared, the closing is scheduled. The buyer is allowed an opportunity to do a final walkthrough. Here they'll ensure the home is in the same condition it was at contract signing and the inspection repairs were made.
The process for purchasing or selling a house, from contract date to closing date, is typically 30 to 60 days. As home values are rising and interest rates are low, now is a good time for both buyers and sellers.
