Congratulations! You've found the perfect home and made an offer that the seller has accepted. Now, you're officially under contract. But what does that mean, and what happens next? In this post, I'll walk you through the process of being under contract in a home purchase and what to expect afterward.
What Does It Mean to Be Under Contract?
Being under contract means that both the buyer and seller have agreed to the terms of the sale. It's a legally binding agreement that outlines the conditions and timeline for the transaction. During this period, the home is effectively taken off the market, and the buyer typically pays an earnest money deposit to show their commitment to the purchase.
What Happens Next? Once you're under contract, several steps need to be completed before the sale can proceed to closing:
Inspections: The buyer usually has a specified period to conduct inspections, such as a home inspection, pest inspection, mold inspection or radon test. If any issues are found, negotiations may occur to address them if stated in the contract.
Financing: The buyer must secure financing for the home purchase, if they are not paying in cash. This involves working closely with a lender to complete the mortgage application process and provide any necessary documentation.
Appraisal: The lender typically orders an appraisal to determine the fair market value of the home, if written in the contract. If the appraisal comes in lower than the purchase price, additional negotiations may be needed.
Contingencies: Any contingencies outlined in the contract must be satisfied before the sale can proceed. Common contingencies include the sale of the buyer's current home, obtaining homeowner's insurance, and completing a final walkthrough.
Closing the Deal:
Once all contingencies have been met, the sale moves forward to closing. At the closing, both parties sign the necessary paperwork, and the buyer pays any remaining closing costs and the down payment. The title to the property is transferred from the seller to the buyer, and the buyer receives the keys to their new home.
Conclusion:
Being under contract in a home purchase is an exciting milestone on the path to homeownership. By understanding the process and what to expect, you can navigate the journey with confidence. Remember to stay organized, communicate openly with your real estate agent and lender, and be prepared to take any necessary steps to ensure a successful closing.
