What Happens After You Put in an Offer on a House?
Navigate the comprehensive sequence of events and crucial decisions that unfold after you submit an offer on a house, leading to ownership.
The period following an accepted offer involves distinct phases. Each has requirements and actions from all parties. Understanding these stages is important for homeownership and property transfer.
Seller’s Response and Negotiation
Upon receiving a purchase offer, the seller has several options: accepting it, rejecting it, or issuing a counteroffer. Acceptance signifies mutual agreement, moving the transaction forward. Rejection ends negotiation, though the buyer may submit a revised offer.
A common scenario involves a counteroffer, where the seller proposes changes to the buyer’s initial terms. Modifications might involve price, closing date, specific items, or contingencies. This initiates a negotiation process involving back-and-forth counteroffers. Each party reviews terms and decides whether to accept, reject, or counter.
Negotiation continues until both parties agree on all terms. This point is marked by a signed purchase agreement, legally binding both parties. Mutual acceptance formalizes the commitment to purchase.
Opening Escrow and Initial Steps
After mutual acceptance, the next step involves opening escrow or engaging a closing agent. This neutral third party, often an escrow company or attorney, holds funds and documents until sale conditions are met. Their role is to ensure purchase agreement terms are fulfilled before title transfer.
A financial step is the earnest money deposit. This deposit, typically 1% to 3% of the purchase price, demonstrates serious intent. Earnest money is usually submitted to the escrow agent within a few business days. This sum is held in a trust account and credited towards the buyer’s down payment or closing costs.
After escrow opening, both parties receive disclosures and documents. These may include escrow instructions and a preliminary title report, requiring review. The preliminary title report provides an overview of the property’s title history and any potential encumbrances, such as liens or easements.
Navigating Contingencies
Contingencies are conditions that must be met for the sale to proceed. They protect the buyer, allowing withdrawal without penalty if criteria are not satisfied. The buyer’s active engagement during this phase involves several actions.
A primary contingency is the home inspection, where the buyer arranges for an inspector to evaluate the property. After the inspection, the buyer receives a report outlining defects. Based on findings, the buyer may request repairs, a credit, or price adjustment. This allows the buyer to address defects before committing.
Another contingency is the property appraisal, typically ordered by the lender. An appraiser assesses the home’s fair market value to support the loan amount. If the appraisal is lower than the agreed-upon price, the buyer can negotiate a lower price, make up the difference with a larger down payment, or challenge the appraisal. The outcome impacts financing.
The loan or financing contingency requires final loan approval. This involves providing financial documentation, such as income verification and bank statements, for underwriting. The lender’s underwriting team reviews the buyer’s financial profile to determine creditworthiness. The goal is a conditional loan approval, outlining conditions before funding.
Other common contingencies include a review of the property’s title for clear ownership and HOA documents, if applicable. The buyer must review HOA covenants (CC&Rs) or financial statements to understand community rules and financial health. Once satisfied, the buyer formally removes contingencies, signaling commitment to purchase. This removal significantly reduces the buyer’s ability to withdraw without financial repercussions.
Final Preparations for Closing
After contingencies are removed, the transaction moves into final preparation for closing. A milestone is the lender issuing a “clear to close,” indicating loan conditions are satisfied and funds are ready. This establishes the final closing date.
The title review process is finalized, and title insurance policies are prepared. The preliminary title report is updated and reviewed for new liens or encumbrances. Both lender’s and owner’s title insurance policies are typically obtained, protecting the lender’s investment and the buyer’s equity. This insurance protects against issues like forgery or errors in public records.
The buyer must secure homeowners insurance before closing. This policy protects against damage from perils like fire and storms. Lenders mandate this insurance to protect their financial interest; proof of coverage must be provided prior to closing.
The buyer should arrange for utility transfer into their name, coinciding with the closing or possession date. This includes electricity, water, and gas. A final walk-through of the property occurs just before closing. This confirms the property is in agreed-upon condition and any repairs are completed.
Finally, the buyer must review the Closing Disclosure (CD) three business days before closing. This document provides a breakdown of final loan terms, closing costs, and funds needed at closing. Reviewing the CD allows comparison against the initial Loan Estimate to identify discrepancies before signing.
The Closing Process
The closing process culminates the home buying journey, transferring legal property ownership. On closing day, the buyer (and sometimes seller) meets with the escrow officer or closing agent to sign all legal and financial documents. These include the promissory note (buyer’s promise to repay the loan) and the deed of trust or mortgage (granting the lender a property lien). The deed, legally transferring ownership, is also signed.
After signing, funds transfer. This involves the buyer providing the remaining down payment and closing costs. The lender then disburses loan funds. These funds are distributed by the escrow or closing agent to the seller, real estate agents, and other service providers.
After funds are disbursed and verified, the deed is officially recorded with the county recorder’s office. This recording formally notifies the public that property ownership has changed, establishing the buyer as the new owner.
The final action is the handover of keys and access devices to the new homeowner. With the deed recorded and keys received, the buyer takes possession of their new property. This marks the transaction’s completion, transitioning the buyer to legal homeowner.