What Happens After an Offer Is Accepted?

The acceptance of a real estate offer shifts focus from property search to transferring ownership. This phase involves detailed steps and legal obligations for both buyers and sellers. Understanding these procedures helps ensure a smoother transition.

Formalizing the Agreement

After an offer’s acceptance, the agreement is formalized into a legally binding purchase contract. This document outlines the terms, conditions, purchase price, contingencies, and timelines. An earnest money deposit demonstrates the buyer’s commitment, typically ranging from 1% to 3% of the home’s purchase price. This deposit is usually held in an escrow account by a neutral third party until closing, then applied towards the buyer’s down payment or closing costs.

Many jurisdictions include an attorney review period, which commonly lasts between three and five business days after the contract is signed. During this time, both buyer and seller can have their attorneys review the contract, propose modifications, or disapprove the agreement. This period allows for legal scrutiny and adjustments to protect each party’s interests before the contract becomes fully binding. Initial disclosures are also exchanged, providing pertinent information about the property and transaction.

Navigating Financial Commitments

Securing financing becomes the buyer’s focus once the agreement is formalized, initiating the mortgage application process. This involves submitting financial documentation to the lender, which begins an underwriting review. Underwriting assesses the buyer’s creditworthiness, income, and debt-to-income ratio to determine loan eligibility and terms. This stage may involve requests for additional paperwork to verify financial stability and employment.

A property appraisal is a mandatory financing step, ordered by the lender to determine an unbiased estimate of the home’s market value. A licensed appraiser inspects the property’s interior and exterior, considering its condition, features, and recent comparable sales. The appraisal protects the lender by ensuring the property’s value supports the loan amount, mitigating risk if the borrower defaults. The appraisal report, detailing the valuation analysis, is typically provided to the buyer within one to two weeks after the inspection.

If the appraisal value is lower than the purchase price, an appraisal gap arises, requiring buyer and seller to address the difference. Options include the buyer paying the gap in cash, renegotiating the price, or the seller reducing the price to match the appraisal. Buyers may also challenge the appraisal or seek a second one, though this can extend the timeline. The appraisal outcome directly impacts the loan amount the lender provides.

Property Due Diligence

Thorough property due diligence, primarily through inspections, is important for buyers after an offer is accepted. A general home inspection, performed by a certified professional, assesses the property’s structure and systems, including the roof, foundation, HVAC, plumbing, and electrical. Buyers may also opt for specialized inspections, such as for pests, radon, septic systems, wells, mold, or specific structural concerns, depending on the property.

Scheduling inspections promptly is important, as the inspection period is a time-sensitive contingency. Buyers should attend inspections to understand issues and ask questions. A detailed report outlines discovered deficiencies, from minor maintenance to significant structural or safety concerns. This report serves as the basis for negotiations with the seller.

Based on inspection findings, the buyer may request repairs, credits, or a price reduction. This negotiation often involves submitting a repair addendum or amendment to the purchase agreement, detailing requested remedies. The seller can agree, offer alternatives, or decline changes. The outcome determines if the transaction proceeds with adjustments, or if the buyer withdraws from the contract.

Ensuring Clear Title and Escrow

After offer acceptance, ensuring clear title and managing the transaction through escrow is essential. A title search is conducted by a title company or attorney to examine public records, tracing ownership history and identifying claims, liens, or encumbrances. This review confirms the seller’s legal right to transfer ownership and that no unresolved financial or legal issues are attached to the property. Common issues include unpaid property taxes, undisclosed mortgages, or easements.

Title insurance protects both buyer and lender from financial loss due to unforeseen title defects or claims. The buyer typically purchases an owner’s policy, while the lender requires a lender’s policy to safeguard their investment. This one-time premium paid at closing provides protection against issues affecting the property’s title, even if not discovered during the initial search.

The escrow company or closing attorney acts as a neutral third party, facilitating the transaction by holding funds and documents until all purchase agreement conditions are met. This includes holding the earnest money deposit, managing legal documents, and ensuring contract compliance. The escrow agent coordinates with all parties, including lenders, real estate agents, and attorneys, to ensure transfer of ownership and funds.

The Path to Closing

As the transaction nears closing, final preparations are undertaken. A final walkthrough is typically conducted by the buyer within days of closing to verify the home’s agreed-upon condition. This confirms negotiated repairs are complete, seller’s belongings removed, and included fixtures and appliances are in working order. It also confirms no new damage has occurred since the previous visit.

Buyers arrange for utility transfers, ensuring services like electricity, water, gas, and internet are switched into their name effective on the closing date. This prevents disruptions in essential services upon taking possession. Coordinating transfers in advance helps avoid potential fees or delays.

Three business days before closing, the buyer receives the Closing Disclosure (CD), a comprehensive five-page form detailing the final terms of the mortgage loan and all transaction costs. Buyers should carefully review the CD, comparing it against the initial Loan Estimate to identify any discrepancies in loan terms, interest rates, or closing costs. Any questions or concerns should be addressed with the lender or closing agent before the scheduled closing appointment.

On closing day, all parties or their representatives sign legal documents that finalize ownership transfer. Buyers sign the promissory note, outlining loan repayment terms, and the mortgage or deed of trust, which secures the property as collateral. Funds, including the down payment and closing costs, are transferred, often via certified check or wire transfer. Once documents are signed and funds disbursed, the deed is recorded, and keys exchanged, completing the real estate transaction.