Time frame to close on a house after offer is accepted - from Sellers Perspective
My partner and I sold our Family Home of 6 years recently and Purchased a new Home in Melbourne.
We were flooded with different kind of thoughts during and after the the offer was accepted by the buyer.
Here is what we experienced during our Journey in selling our 1st home.
We put our House on sale in the market. We did a few Open Houses and On a fine Saturday after the Open House we got an offer from a Buyer.
At first we were not Ok with the offer and asked the Realtor to add in few more Thousand Dollars to reach our Expectations.Voila, the Buyer was fine with that.
Long story short Yes! we accepted the offer.
A detailed timetable from contract to closure from seller perspective
We’ve described the house-closing timetable below to assist you feel more at ease with the home-selling process ( from the seller perspective)
As you go through each of these stages, keep in mind that many of them will be happening at the same time.
Make every effort to be organised in order to meet any deadlines that may arise.
Negotiating a deal
Timeframe: 2-5 days
It took us 2 days to come up with and Convince the buyer for the price we are looking for.
Negotiating the various components of the purchase agreement is the first stage in the closing process. When a buyer makes an offer on a house, if the seller likes what the buyer have to say, seller will usually negotiate the various components with the buyer.
The purchase price, the closing date, the escrow deposit, and the inspections are examples of these. The clock will start counting down to closing day after both parties have reached an agreement and signed it.
Getting a deposit from the buyer
Timeframe: 2-10 days
After the buyer has signed the contract, you’ll need to receive in your earnest money deposit. This earnest money deposit serves as your “good faith deposit,” indicating that buyer plan to purchase the property.
When the buyer submit an offer, seller’s real estate agent will usually collect a check from buyer for the amount and send it to the listing agent to be placed in an escrow account.
An escrow account, rather than being kept by the seller, is handled by a third party – an escrow firm or escrow agent – who is not personally involved in the transaction.
Getting title insurance and a title search
Timeframe: 2-3 weeks
Ordering a title search and insurance is the next step in this procedure.
Depending on your state’s laws, the buyer will either hire a title business or a real estate attorney (Conveyansor/RealEstate Attorney) to complete the task.
A title search, in essence, guarantees that there are no problems with transferring ownership rights to the property.
Seller and Buyer both needs to Liaise with their respective Attorneys to provide all the details like the council rates, water Bills any pending. seller and buyer both needs to adhere to selling and Buying Laws of your state /country.
Title insurance protects you from being held liable if any difficulties, such as previously unpaid property taxes, are uncovered in the future.
This coverage will most likely be ordered for you by your real estate agent, and the amount will be paid at closing.
Buyer Conducts their inspections
Timeframe: 7-15 days
Even though seller has nothing do in this step( unless there are any repairs advised), they still need to wait for the Inspections to go well. Buyer will be responsible for arranging and executing any inspections specified in the purchase agreement.
Buyers are usually permitted to attend these inspections and ask the examiners any questions they have.
When everything finished, Buyer receive a detailed report on what was discovered, which buyer may use to submit your repair requests to the seller.
The vendor, for their part, will have a few more days to react to your demands.
If all goes well, you’ll strike an agreement and be able to proceed with the deal.
However, if this is not done, purchasers may move away from the hoarding.
Buyer would look at Obtaining an appraisal
Timeframe: 5–10 business days
If the buyer buying a house with a mortgage, their lender will almost certainly need an acceptable appraisal as a condition of the loan.
An appraisal establishes the fair market value of the property and ensures that neither you nor your lender overpay for it.
Buyer will be fine to proceed as long as the appraiser gives a value to the property that is equal to or more than the purchase price in the contract.
However, if the assessment is too low, buyer may need to renegotiate the price with the seller.
It's waiting Time for the seller to wait for the Buyer to receive conditional loan approval:
Following the submission of Buyers loan application, buyer will engage with a servicer to obtain loan papers.
Then Buyer will enter underwriting, where an underwriter will examine your finances in the same way that the lender did when they originally did your pre-approval letter.
However, the procedure is more difficult this time since they are attempting to give your loan approval.
Most likely, the lender will initially grant the Buyer a conditional loan approval, which means Buyer must fulfil specific criteria before being authorised for thier loan.
Now the Buyer will want to do everything they can to fix these circumstances as soon as possible so that the bank doesn’t close on the buyer.
Common delays that affect closing
According to the National Association of Realtors, 24 percent of closings are postponed but finally settle.
Only 7% of contracts are terminated before the transaction is completed.
Buyer finance difficulties are the leading cause of closing delays.
Other common causes of delays include title/deed difficulties, house inspection/environmental concerns, and valuation issues.
Buyer finance difficulties
Buyer finance difficulties are the most common reason for a house transaction to fall through.
What can you do if a buyer is delaying a transaction due to financial issues?
Not much, according to Mark K. It is the buyer’s responsibility to engage with their lender to keep the deal going ahead.
“If the buyer commits to responding to a lender’s request in a timely manner, the loan may complete quite quickly,” Mark adds.
“I’m generally in contact with the buyer’s lender, so I’ll know when we’re going forwards.”
Be prepared for setbacks During the house Inspection.
The buyer will arrange a home inspection within 7-10 days after opening escrow.
A house inspection will evaluate the home’s functionality and safety, and the buyer’s lender will usually need a home inspection before proceeding with a mortgage loan.
The visual inspection usually takes a few hours, and the written report is delivered within a few days. However, the results of the house inspection might be the largest stumbling block in your home sale.
Most offers are contingent on a home inspection, which means the buyers might back out of the agreement if the inspection reveals something they don’t want to deal with and you aren’t ready to fix.
How a house appraisal might cause a delay in closing
The appraiser evaluates your house in one of three ways: beneath the buyer’s offer, close to the offer, or over the offer.
A house appraisal may cause your transaction to be delayed if the appraiser determines that the home is worth less than the buyer’s offer.
To take the sale forwards, the buyer and seller will have to either bargain to make up the difference or obtain a second assessment.
These talks might add a few hours—or a few weeks—to the closing process. It all depends on whether (and when) you and the buyer can reach an agreement.
Hold-ups in home inspections
According to the study, home inspection concerns accounted for 13-14% of February & march closing delays in 2021.
A house inspection contingency is included in the majority of purchase offers.
This gives the buyer the option to pull out of the agreement if the inspection report finds severe concerns that they are unwilling to deal with.
However, if the report finds little, or if the buyer decides to proceed nonetheless, the process of negotiating repairs with the seller might possibly stall the acquisition process and cause the closing to be delayed.
Obstacles to appraisal
According to the studies, appraisal problems were the second most prevalent reason for closing delays in February, accounting for 23% of all delays.
The property must be assessed before a lender would commit to funding a loan.
If the appraisal comes in below the purchase price, most lenders will not accept the loan, causing the closing to be delayed and possibly jeopardising the deal.
However, if you have appraisal issues, there are solutions available, and your REALTOR® and lender can help guide you through the process.
Closing day: How long does the last step take?
So you’ve made it all the way to the closing table. You can finally start breathing again.
If you complete all of the essential processes and activities, and the appropriate money are placed in escrow, closing day should be quick and easy.
“The closure usually takes an hour to an hour and a half,” Mark adds.
“The deed, bill of sale, and closing disclosure are the three most significant documents.
The remainder are often various disclosure paperwork required by the title company, which vary by state.”
Depending on your state’s regulations, you may or may not be compelled to attend the closing.