I Made an Offer on a House, Now What?

Submitting an offer on a home marks a significant step toward homeownership. This initial action is the beginning of a detailed, multi-stage process. The period following your offer involves negotiations, investigations, and financial preparations that require careful attention. This article outlines the subsequent phases as your offer progresses toward purchasing a home.

Seller’s Response and Negotiation

Once your offer is submitted, the seller can respond in several ways. They might accept your offer outright, agreeing to all terms. Conversely, the seller could reject your offer, concluding that negotiation. A common outcome is a counteroffer, where the seller proposes changes to your original offer.

A counteroffer typically involves alterations to the proposed purchase price, closing date, or contingencies. For instance, the seller might request a higher price, a quicker closing, or removal of certain conditions. Evaluating a counteroffer requires careful consideration of these revised terms against your financial goals and timeline. Your real estate agent presents these counteroffers and helps you understand their implications.

Following a counteroffer, you can accept the new terms, reject them, or submit your own counter-counteroffer. This negotiation continues until both parties agree on all terms or one withdraws. Flexibility and clear communication are important to reaching a mutually agreeable contract.

Entering Escrow and Due Diligence

Upon agreement, the transaction moves into escrow, a neutral third-party process that secures funds and documents until all sale conditions are met. This phase protects both buyer and seller. During this time, the buyer undertakes due diligence activities to assess the property and ensure it meets their requirements.

A primary step in due diligence is the home inspection, where a qualified inspector examines the property’s structure, systems, and components for defects. The inspection report details findings such as roof damage, plumbing problems, or electrical deficiencies. Based on these findings, you might request the seller to complete repairs, offer a credit at closing, or, if issues are significant, exercise an inspection contingency to withdraw your offer.

Another important step is the appraisal, conducted by a licensed appraiser to determine the property’s fair market value. Lenders require an appraisal to ensure the loan amount does not exceed the home’s actual value. If the appraisal is lower than the agreed-upon purchase price, it could impact your financing, potentially requiring more cash at closing or renegotiation with the seller.

Buyers must review all seller-provided disclosures, which typically include information about the property’s condition, known hazards like lead-based paint, or environmental concerns. These disclosures provide insight into the property’s history and potential liabilities, allowing you to make an informed decision. Understanding contingencies for inspection, appraisal, or financing is also important, as they provide specific conditions under which you can withdraw from the contract without losing your earnest money deposit.

Loan Approval and Final Preparations

Once the due diligence period concludes, the focus shifts to securing final loan approval and preparing for closing. Your lender initiates the loan underwriting process, which involves a review of your financial standing and the property details. This phase typically requires submitting documents, including recent pay stubs, W-2 forms, tax returns, and bank statements, to verify your income, assets, and creditworthiness.

During underwriting, the lender assesses your debt-to-income ratio and employment stability to confirm your ability to repay the loan. They may also request additional documentation or explanations for unusual financial activity. It is important to respond promptly to all lender requests to avoid delays in the approval process, which can take several weeks.

You will receive the Closing Disclosure (CD) at least three business days before your scheduled closing date. The CD outlines all the final terms of your loan, including the interest rate, monthly payments, and all closing costs. Compare the CD against the initial Loan Estimate to identify any discrepancies in fees, credits, or loan terms.

Before closing, secure a homeowner’s insurance policy, as lenders require proof of coverage to protect their investment. This policy typically covers hazards such as fire, theft, and natural disasters, as well as liability for accidents on the property. Finally, prepare the necessary funds for closing, which include your down payment, closing costs, and any prepaid expenses like property taxes or homeowners insurance premiums. These funds are typically transferred via a wire transfer or certified check, usually initiated a day or two before the closing.

Closing Day and Beyond

As the closing date approaches, a final walkthrough of the property is conducted, typically 24 to 48 hours before the closing appointment. This walkthrough ensures the property is in the agreed-upon condition, any requested repairs are completed, and no new damage has occurred since the inspection. It also confirms all fixtures and appliances included in the sale are present and functioning.

The closing appointment is the culmination of the home-buying process. It usually takes place at a title company or attorney’s office and involves signing legal documents. These documents include the promissory note, your promise to repay the loan, and the deed of trust or mortgage, which grants the lender a lien on the property. Other disclosures and agreements related to the property and loan terms will also be signed.

After all documents are signed, the loan is funded, and the deed is recorded with the local county recorder’s office, officially transferring ownership. The recording process typically takes a few hours to a few days, depending on county procedures. Once the deed is recorded and funds are disbursed, you will receive the keys to your new home, marking the completion of the purchase.