What Happens After an Offer Is Accepted?

After a seller accepts an offer on a home, the home-buying journey transitions into a structured series of steps. This phase involves various checks and legal procedures that lead to the eventual transfer of property ownership. It transforms a verbal agreement into a legally binding transaction, requiring careful attention to detail and adherence to specific timelines. Buyers engage in a period of due diligence to confirm the property aligns with their expectations and to secure necessary financing, guiding them towards becoming a homeowner.

Formalizing the Purchase Agreement

After an offer is accepted, the transition to a legally binding commitment begins with a purchase agreement, also known as a sales contract. This document outlines all terms and conditions, solidifying the understanding between buyer and seller and guiding the process to ownership transfer.

A comprehensive purchase agreement details the purchase price, legal description, and target closing date. It also includes contingencies that protect both parties. These conditions, such as successful property inspection, buyer financing, and property appraisal, must be met for the sale to proceed. If not met within specified timeframes, the agreement may be terminated without penalty.

An earnest money deposit is required to demonstrate a buyer’s commitment. This deposit, usually 1% to 3% of the purchase price, is held in an escrow account by a neutral third party like a title company or attorney. It demonstrates commitment and is later applied towards the buyer’s down payment or closing costs, or returned if contingencies are not met.

The agreement is typically signed and earnest money deposited within two to five business days of offer acceptance. Real estate agents play a role in drafting initial terms and communicating between parties. In many jurisdictions, attorneys also review or draft the agreement, providing legal counsel and ensuring enforceability.

Property Inspections and Valuation

Once the purchase agreement is formalized, attention shifts to the property’s physical condition and market value. This involves conducting thorough property inspections. Common inspections include a general home inspection, assessing structural integrity and major systems like plumbing and electrical, along with specialized inspections for pests, radon, or septic systems and wells. Qualified professionals perform these evaluations.

The inspection report details findings from minor repairs to significant structural concerns or safety hazards. This report empowers the buyer to make informed decisions about proceeding with the purchase. Within the contingency period, the buyer has several options. They might request the seller to make repairs, offer a credit towards closing costs for identified issues, or, if allowed by the contingency, choose to withdraw from the contract.

Simultaneously, the property undergoes a professional appraisal, a process distinct from the home inspection. Lenders require an appraisal to assess the property’s market value, ensuring it supports the loan amount. A licensed appraiser evaluates factors including the property’s size, condition, features, and recent sales of comparable homes.

The appraisal is typically ordered by the lender shortly after the purchase agreement is signed. If the appraisal comes in lower than the purchase price, it can impact the transaction. The buyer may need to make up the difference in cash, the seller might lower the price, or parties could renegotiate terms. Without a satisfactory appraisal, the lender may not approve the loan for the full amount.

Securing Your Financing and Title

With property inspections and appraisal underway, focus shifts to securing the necessary financing and clear legal ownership. The loan underwriting process is a lender’s review of the buyer’s financial health and property details. Buyers are asked to provide an array of documents, including income verification, bank statements, and tax returns. This allows the lender to assess the buyer’s ability to repay the loan and finalize approval.

Responding promptly to lender requests for additional documentation is important to keep the underwriting process moving forward. Final loan approval, often referred to as “clear to close,” signifies the lender is prepared to fund the mortgage. If specific conditions are not met during underwriting, such as unresolved credit issues or discrepancies in financial documentation, loan approval could be delayed or denied.

Concurrently, a title search is performed to confirm the seller’s legal right to transfer ownership and to identify any claims or encumbrances on the property. This involves examining public records like deeds, court records, and property tax records to uncover liens, easements, or other defects. The search provides a comprehensive history of ownership and financial obligations.

Based on title search findings, title insurance is issued, offering protection to both the buyer and the lender against future claims from title defects. The title company conducts the search and prepares for insurance issuance. Should any title issues be discovered, such as unpaid taxes or unreleased mortgages, the title company works to facilitate their resolution before closing.

Preparing for and Completing the Closing

As the transaction nears its conclusion, several preparations ensure a smooth transfer of ownership. Reviewing the Closing Disclosure (CD) is a key step. This document, provided by the lender at least three business days before closing, itemizes all final costs, including loan fees, escrow amounts, and real estate commissions. Buyers should compare the CD to the initial Loan Estimate to identify discrepancies and understand financial obligations.

In the days leading up to closing, buyers arrange for essential services to be transferred into their name. This includes setting up utility accounts such as electricity, water, and gas, which ensures continuous service from the moment of ownership transfer. Obtaining homeowners insurance is also mandatory, as lenders require proof of coverage. This policy protects the property from risks like fire, theft, and natural disasters.

A final walkthrough of the property is typically scheduled within 24 to 48 hours before closing. The purpose of this visit is to confirm the property remains in the agreed-upon condition, ensure all seller’s personal belongings have been removed, and verify any agreed-upon repairs from the inspection have been completed. This offers a last opportunity to address unexpected issues.

The closing meeting culminates the home-buying process. Attendees typically include the buyer, seller, their real estate agents, and a closing agent or attorney. During this meeting, numerous legal documents are signed, such as the promissory note (obligating loan repayment) and the mortgage or deed of trust (securing the loan). Funds are transferred, keys are handed over, and the deed is recorded with the local government.