Signed Contract, Now what?
Either your offer has been accepted, or you have found a Buyer. For either side, this can be an overwhelming and emotional time. Many people feel like everyone else involved, from agents to attorneys to lenders, do this all the time and forget what it is like to be the home buyer/seller who may not even know what questions to ask at this point. Whether I am your Agent or Attorney, I always want you to feel like you can ask me anything. You aren't "wasting my time" or asking too basic a question, since it is my #1 job is to make sure you understand what is going on and what needs to happen next. This post should also help you through the fist steps towards closing.
The acceptance date (usually noted above the Seller's signature on the contract) starts the clock ticking. Almost all the deadlines until closing are calculated from this date. Today marks the formal start of the "Attorney Review Period," often referred to "a/i" for attorney/inspection period. This is when the attorneys review the contract and draft their attorney review letters to address any additional items to negotiate, including any inspection matters, sometimes the tax proration amount, as well as other protections/adjustments to the standard language of the contract. It usually lasts five business days, but that is often extended for various reasons.
During this time, several things happen at once. If I am your agent, I will send the signed contract to your attorney. If I am your attorney, this is usually when I first get involved. I will take the reigns from your agent and begin my review of the contract. Your next steps depend on if you are the Buyer or the Seller. As the Seller, there's not much for you to do but wait for the Buyer's attorney to send his review letter. If you live in a Condo, you may want to get a head start on obtaining the HOA documents if you haven't already. Otherwise you can expect a couple days of quiet until the Buyer's letter is received.
If you are the Buyer, here are your next steps:
The deal is still somewhat tenuous during the a/i period, as there are many opportunities for the Buyer's attorney to disapprove of the contract and terminate the deal (with the refund of the Buyer's earnest money). But once all matters have been resolved and the attorney review period is closed, the transaction becomes much more set in stone. This is when Buyers make the second earnest money deposit mentioned above. At this point the buyer's lender takes the reigns, as they work to meet the conditions required to obtain the loan. The Buyer will work with the lender to provide all relevant documentation.
The next big deadline is the financing contingency date, which is the date by which the lender must provide a "Clear to Close." If not yet able to do so, the Buyer's attorney must request an extension of the financing continency date. The Seller is under no obligation to grant the extension, but it is customary to do so, since in accepting a financed offer (as opposed to cash), the Seller tacitly agreed to work with the Buyer's lender to obtain the loan. If the Seller does not agree to extend, most often the Buyer will terminate the deal (with the return of they earnest money). If the Buyer decides to proceed, the earnest money will be at risk since the lender may not be able to provide the loan funds in time for closing. This is an exceedingly rare possibility. It is the Buyer's attorney's responsibility to protect the Buyer's earnest money by promptly requesting extensions as necessary. Once the lender issues Clear to Close, the final stages of the transaction begin. See THIS POST for more information about this step in the process.
This overview should help guide you during these first steps. As I mentioned, you should always feel like you can ask me questions that you may have at any time during the transaction. Please feel free to do so in comments below, or reach out to me directly at 773-991-1529, or Alex@AlexGrange.com.
I look forward to working with you towards a smooth closing!
While I strive to be known for my responsiveness, and I am always available at 773-991-1529, Alex@AlexGrange.com, I hope for this blog to be an additional resource for those looking for more information on transacting in real estate.