After reaching a ‘meeting of the minds’ (i.e. an agreement to all terms) both the Buyers and the Sellers initial and sign any modifications to the final contract and addendums. You are now ‘Under Contract’ and the contract moves to the ‘Review and Inspection’ period.
Attorney Review & Modification: With the most common contracts used in our area (ie 7.0) both the Buyer and Seller attorneys have 5-10 business days to make appropriate modifications to the contract and addendums. Since this period is ‘built-in’ both parties can feel comfortable signing a contract prior to delivery to their attorney. If you have come to an agreement do not hesitate to sign. We have seen too many good offers fall apart because one party thought the other was stalling.
Whether you are a Buyer or a Seller it is important to hire an attorney. The other side will have one so you should too. Most real estate attorneys do not charge a fee until the property actually closes. Read this: Why you need an Attorney. Talk to a few and hire the one you feel will communicate well with you. Our Agents have worked with and can recommend attorneys that do a great job. Look for a list of your Agent’s recommendations at: Agent Recommendations.
Once a contract is in place your attorney will be handling most things related to the contract itself, title, payoffs, etc. and the communications with the other side. Your agent will be arranging inspection times, providing documents to lenders and attorneys, meeting the appraisers etc. It is important to keep in touch with your attorney’s office weekly or anytime you have a legal question.
Whether you are a Buyer or a Seller you should review the checklists below for other important steps/milestones.
The contract states ‘time is of the essence’. That means we need to comply with specific time frames associated with the next stages of the purchase process. Besides your attorney and lender we need a Home Inspector on our team.
- You are entitled to have a professional home inspector review the property with you. Do not waive this opportunity or let it slip by. Schedule the inspection right away. Realstar always recommends using a licensed, ASHI approved inspector. Read Why you want an Inspection. Look for a list of your Agent’s recommendations at Agent Recommendations.
- Always consider further opportunities for discovery of other potential problems, most specifically Radon. You may also want to consider tests for lead based paint, mold and more.
- You need to attend the inspection. Find a couple times that fits both your schedule and the inspectors then call your agent to arrange one of those times with the Seller. Home Inspectors get paid at the inspection so bring your checkbook.
- Most inspections take 2-3 hours. We do not recommend bringing children, family or friends as they frustrate inspectors trying to work. It is not yours yet so be respectful of the property and it’s contents.
- Bring a notepad, tape measure and a camera to help with your decorating ideas. Home Inspectors are professionals. Feel free to ask them questions but, also give them space to focus on the task at hand. They will usually spend time at the end summarizing what they find. You will also get a report sent to you.
- Discuss the inspection results with your attorney and your Agent. Determine which issues are important (ie life safety such as electrical problems). Keep in mind no property is perfect. See ‘Inspection Notes’ below.
- Do not be afraid of things like ‘elevated’ radon. There are numerous and very effective ways to remediate to safe levels. Remediation is a cost usually borne by the seller and often includes a re-test showing the success of the remediation.
- Make sure you make a loan application with your lender within seven(7) business days (most contracts require it) or you could risk default. Whether you sit face to face or apply over the phone have your lender send an email to all parties stating your application is being processed.
- Once you apply for the loan your lender will contact the seller’s agent to complete the appraisal.
- Make sure you discuss where all your money is coming from for closing. Keep in mind lenders do not like to see money move around accounts without documentation.
- Closing dates usually do not change so plan on closing the date indicted in the contract.
- It is important to contact your lender every week. Make sure they do not forget about you or are waiting for documents from you. Interest rates are rising. A delay in the closing could mean paying a higher interest rate.
Two items to understand while under contract 1) Our Realtor association rules are that your house can still be shown until you tell us differently. If you have a very solid contract you can send us an email requesting ‘no more showings’. 2) There will be a few instances when various inspectors and/or appraisers need access to the property. Often you will have a least a day or two warning. Try to be as accommodating as possible.
- Sellers Inspection Notes
- Within the first 5 to 10 business days the buyers will do an inspection on the property. We strongly suggest you not be there during the inspection. You do not want to make any comments about the condition of an item (ie furnace) or that ‘Uncle Louie is handy’ and did all the electrical work etc. It is far better for you to stay away during the inspection.
- Securely cage or remove all pets. Make sure there is easy access to the electrical panel, furnace and water heater. Also, make sure there is a clear access to the attic and crawl spaces – so clear those areas now.
- No property is perfect so don’t take offense to the report. There will always be a few items that a professional inspector will mention as ‘deficient’ or ‘in need of repair’ in their report. These will be summarized in a letter to your attorney. The inspector’s job is to find things we normally don’t see. Most inspection issues are not deal killers and the buyer’s concerns can usually be resolved. See ‘Inspection Notes’ below.
- Most buyers also test for Radon. The testing period lasts for 48 hours. Many times the testing company will ask for access to the property prior to the actual home inspection. For 24 hours prior to and during the radon testing period make sure to keep your windows and doors closed. Going in and out as needed is fine but leaving windows and doors open can draw air up from cracks in the basement and make your radon test results worse.
- More Radon: During the testing period do not use anything that vents to the outside air (ie fireplace, bath fan, dryer, cooktop or microwave fans) as the use of these could also make the radon test results worse.
- Buyers and their attorneys need time to review and discuss the inspection report. As such, it will usually be several days before you receive an inspection letter requesting repairs. Many buyer’s attorneys do not send a letter until they have results from the radon test so that may add a day or two as well. The letter will go to your attorney so you will ‘know’ before we know. See Inspection Notes below. Other Seller Stuff
- Pull together any property information available including: 1) existing lender information, 2) the name and phone number of your Homeowner’s Association etc. (even if voluntary), 3) if you have not provided one dig out a prior survey and 4) a list of your utilities. Copies of items 1 & 2 should be given to your attorney’s office asap.
- Do not turn off any utilities. These must remain ‘ON’ for the inspection and all the way through and including the day of closing. We have seen clients get charged hundreds of dollars to get something re-initiated and turned back on. Down is fine, Off is not.
- Keep paying your mortgage, taxes and assessments.
- Closing dates usually do not change so plan on closing the date indicted in the contract.
- Contact your attorney’s office every week to be sure they have what they need from you.
Inspections take 2-3 hours for a normal sized home. The home inspector’s job is to find things we normally don’t see when buying a property. Inspectors will look over everything from the electrical panel to the mechanical systems (ie heating & a/c) to plumbing and more. They are looking for ‘life safety’ issues (ie unsafe wiring) to plumbing and even roof leaks to anything with abnormal wear and tear. Most inspection issues are not deal killers and the buyers concerns can usually be resolved. No property is perfect. There will always be a few items that an inspector will mention as ‘deficient’ or ‘in need of repair’ in their report.
Just about every inspection results in a few issues that need to be addressed by the parties. Often times these relate to items that were not obvious to the buyer (ie bad fuses in the electrical panel, gas leaks, leaky plumbing, radon, etc). That’s why they hire an expert. The most important items (and the deal killers) usually relate to life safety or items not functioning as they should. All deficiencies will be summarized in a letter from the Buyer’s attorney to the Seller’s attorney.
Items relating to life safety (ie electric, plumbing, radon etc) are things most sellers will address. Some items like torn screens, bad paint, stained carpets and cracked tiles are usually not something sellers will correct. Why? Those items were there for the discovery and were obvious to the naked eye.
Often times the the most pertinent issues related to inspections result in some further negotiations among the attorneys. Depending on the buyer’s requests a seller usually would 1) Make the repair, 2) Provide financial credit in lieu of the repair or 3) Deny the repair (and risk this item being a deal killer). A buyer would then need to decide if the items that were not being directly repaired are worth the money offered (if any) or are something they can live with if the repair was denied or risk losing the property as the seller can cancel a deal too. The seller needs to decide if this buyer walks away are the inspection items something they probably need to repair or at least ‘disclose’ as a deficiency to the next buyer. It is very important that both buyers and sellers discuss all their options with their attorneys.__________
Of course, at any time feel free to give us a call. We would be happy to answer your questions.