At this point, you have found the home you liked, written up the contract and your offer has been accepted. Your lender is working on the financing, and you are working on scheduling inspections and clearing your contingencies. Let’s review some of these steps that take place after the offer is accepted and what you need to do to make sure the closing takes place as scheduled and you can move in to your new home!!
Opening Escrow
Once the purchase contract has been agreed on, signed, and delivered to all parties, the listing agent typically will open escrow. They will get in touch with the escrow company and forward the signed contract and all the addendums such as counteroffers, etc.
You will need to deposit your earnest money deposit with them as soon as possible, the purchase contract usually has a stipulation that states you will wire the funds to them or deposit a cashier’s check. Time is of the essence here as any delays at this stage make everyone in the process nervous if you delay making that deposit.
You will get a package of forms from escrow that you will have to complete and deliver back to them. Again, time is of the essence on these forms as they have critical information the title company needs to process to avoid last minute delays. More info on this in the “understanding title and escrow” section of this guide.
Monitoring your financing
Although your REALTOR® should be in touch with the lender and coordinate some aspects of your loan, it is in YOUR best interest to follow up and make sure they are moving along. After all, you are the one on the hook if the financing is delayed or anything goes wrong, not the lender. Here are some things you should check on;
- Appraisal – the appraisal should be ordered ASAP once the offer is accepted. There is a lot that depends on the value of the home, not the least of which is your loan approval altogether. Depending on the terms of your contract, if that appraisal is low as sometimes happens, your loan will have to be restructured. You may also need to prepare to cover an appraisal gap if that was the agreement with the seller. You want to follow up and make sure you are told when the appraisal is ordered and completed. Refer to your contract and talk with your agent as appraisal contingencies are clearly spelled out on the contract.
- Verification of employment and assets. Another critical element of your loan is verification of your employment, income and assets. Even though the lender’s processing staff should know to get on this right away, it is not uncommon to find out that days before closing, some of this has not been done. Make sure to check on this and ensure that it is done no later than two weeks after your offer has been accepted.
- Loan submission and approval. Once the lender has fully documented your loan, should be no more than 2-3 weeks after your offer was accepted, the lender should be ready to submit your loan for final approval. At this point, everything has been documented on your application. Appraisal is completed, employment verification and assets (the money) have been fully documented as well. It is not time to get that “clear to close” from them.
Final approval and loan documents. Once you have that final approval, and any underwriting conditions are cleared, you will have final approval and should be cleared for loan documents. Ideally, you want to see this happen a week before your close of escrow date.
Ordering your inspections
Part of the terms of your purchase agreement included doing some inspections of the property you are buying. Among them you may find you need to do:
- Home Inspection- This one is standard on almost every purchase. A home inspector will go through the house literally from top to bottom and report on the condition of the features and systems of the house. Keep in mind that the scope of this inspection is not all-encompassing. There are more specialized inspections that may be needed depending on the property, and depending on the outcome of the inspection. Some of these additional inspections are named below.
- Termite inspection- This is also fairly standard on all purchases in California. A licensed pest control company will perform an inspection of the home and determine if there is an active infestation or a potential for such down the road. They will provide a full report along with an estimate of the cost to cure. Termite work is typically paid by the seller, and there may be a cap on the amount. Anything beyond the maximum amount, you or the seller may opt to renegotiate the contract or bow out altogether.
- Radon or Mold inspections – It may be necessary to have one of these if the home inspector noted on the report that there is concern that Radon or Mold may be present, both of which are harmful and potentially may affect the health of the occupant.
- Roof inspection – These are common in more established neighborhoods where the housing supply is 30+ years old. Roofs develop wear and tear over time and you may decide to have it inspected to make sure you are not going to have an unpleasant surprise during one of those heavy California rainy seasons! The home inspector may also recommend one after their visual inspection of the home.
There are numerous other inspections that may be prudent or necessary based on the systems in the house. When you work with a qualified REALTOR® with experience in the area, they will give you guidance and sound advice on what to have inspected.
IMPORTANT: Your inspections have to be done on a timely basis to stay within contract terms. You are not allowed to ask for inspections that were not agreed upon in the purchase contract or requested as part of other inspections that were agreed upon.
Signing your final loan documents
By the time you get to this stage, you can see homeownership on the horizon. You are “this close”! There are a few things to keep in mind once you are ready for this phase.
You will more than likely be given the option of where to sign your final loan documents. Most people choose their home or office. You may incur a fee for this convenience though. It is typically $300-$500 dollars. Most of the time you also have the option of going into the escrow company’s office and signing there, avoiding that additional fee. It is also more expeditious to go in, albeit not always convenient as they are usually only open 9-5 which may conflict with your work schedule.
Once the loan documents are signed, they have to go back to the lender for review and verification of any “prior to funding” conditions. Make sure to allow ideally 72 hours from signing to final closing and recording of the deed giving you official title to your home.
Final walk through inspection
This will happen maybe before you sign loan documents, it may also happen after you sign loan documents. It should happen before final recording of the deed though, for your protection. This is when you verify that the property is in the same condition, or better than when you saw it. It is also when you verify that any repairs that were agreed upon, were completed. If the agreement was that the property was to be vacant at time of closing, this is a time to check on that as well.
There are a lot of nuances to walk-through inspections before closing. This is when you and your REALTOR® should be fully aligned on what the expectations are.
CRITICAL ITEM: The final walk-through is to verify that whatever the condition of the property was at the time the offer was accepted, is still the same or better. It is NOT the time to come up with new items that you think should be fixed or upgraded. It happens from time to time that someone will say “but I thought that xxx was going to be done”. If it was NOT part of the signed contract, do not expect it to be done. This applies the same for your rights as a buyer. The seller can’t decide that they are going to burden you with something just because “they though you wouldn’t mind” if it wasn’t agreed upon, it is not part of the contract and any unarticulated expectations have no binding agreement on the other party. This can not be stressed enough
Moving In
So when do you get the keys?! – You will get the keys based on the agreed-upon terms of the contract. Usually the day there is a confirmed recording of the deed by the title company, making you the official new owner. It is also common to have some time for the seller to move out after closing before you get the keys. It really depends on the terms of the contract. You and your REALTOR® should have a clear understanding of when that is to happen at this point.
As you move in, a few things to keep in mind:
- Make sure to change ALL the locks in your new home. You have no idea who may have keys to the house before you moved in, safety is the concern here.
- Make sure all utilities are transferred over to your name.
- Notify the post office of your new address