What Happens After Your Offer Is Accepted?

Congratulations on having your offer accepted on a home. This milestone marks the beginning of a detailed period in the home-buying journey. While the initial negotiation is complete, a series of important steps now follow to move from an accepted offer to the final transfer of ownership. Understanding these upcoming stages can help ensure a smoother and more confident progression toward owning your new home.

Formalizing the Agreement and Initial Deposits

After an offer is accepted, the terms are formalized through a legally binding document known as a purchase agreement, sales contract, or purchase and sale agreement. This document outlines the specifics of the transaction, including the agreed-upon price, the closing date, and any contingencies that must be satisfied for the sale to proceed. It also details inclusions and exclusions, such as appliances or fixtures, and identifies all parties involved.

An earnest money deposit (EMD) is usually submitted by the buyer shortly after the purchase agreement is signed. This deposit, often referred to as a good-faith deposit, shows the seller that the buyer is serious about the purchase. The amount typically ranges from 1% to 3% of the home’s purchase price, though it can vary based on local market conditions and competitiveness. This money is held in a neutral third-party escrow or trust account, often by a title company, real estate brokerage, or attorney, until closing.

The earnest money deposit is generally due within one to three business days of the offer’s acceptance. If the transaction proceeds to closing, this deposit is typically credited towards the buyer’s down payment or closing costs. However, if the buyer defaults on the contract without a valid reason covered by a contingency, the seller may be entitled to keep the earnest money as compensation for taking the property off the market.

Property Review and Contingency Fulfillment

With the purchase agreement in place, the home inspection phase begins, allowing the buyer to assess the property’s condition. A licensed home inspector examines various components of the house, including the roof, foundation, heating, ventilation, air conditioning (HVAC) systems, plumbing, and electrical systems, to identify any material defects or safety concerns. The inspection report provides a detailed overview of findings, which can then be used to negotiate repairs with the seller, request credits, or potentially withdraw from the contract if an inspection contingency is included. Beyond a general home inspection, specialized inspections for pests, radon, or septic systems may also be conducted, depending on the property type, its age, or specific regional concerns.

The property appraisal is usually required by the lender to determine the home’s fair market value. A licensed appraiser evaluates the property’s characteristics, location, and recent comparable sales to provide an independent valuation. The appraisal ensures that the property’s value adequately supports the loan amount, protecting the lender from over-lending on an asset. If the appraisal value comes in lower than the agreed-upon purchase price, this can lead to renegotiation, the buyer paying the difference out-of-pocket, or the buyer withdrawing from the contract if an appraisal contingency is in place.

These reviews are tied to contingencies, which are conditions that must be met within specific timeframes for the contract to remain valid. Common contingencies include inspection, appraisal, and financing contingencies, all designed to protect both the buyer and the seller. For instance, an inspection contingency allows the buyer to back out or renegotiate if the home inspection reveals significant problems. Similarly, an appraisal contingency provides an escape route if the property does not appraise for the agreed-upon price. Satisfying these conditions, or formally removing the contingencies, is a necessary progression toward closing the transaction.

Securing Your Loan

After the property review, the focus shifts to finalizing the mortgage approval through the loan underwriting process. Underwriting involves the lender verifying all aspects of the buyer’s financial profile, including income stability, asset availability, and credit history, to confirm eligibility for the loan. This detailed review ensures the buyer meets the lender’s criteria and can realistically manage the mortgage payments.

During underwriting, the lender will request a range of financial documents to support the loan application. Buyers can expect to provide recent bank statements to show asset verification, pay stubs to confirm employment and income, and tax returns for the past two years to verify income consistency. Other documents might include investment account statements or gift letters if funds are being received from family. Prompt submission of these requested documents is important to prevent delays in the loan process.

The underwriting process typically culminates in either a conditional approval or a final approval. Conditional approval means the loan is approved pending the satisfaction of specific remaining conditions, which often involve providing additional documentation. Final approval indicates that all conditions have been met and the lender is prepared to fund the loan. During this time, buyers often have the opportunity to lock in their interest rate, which protects them from potential increases in market rates before closing.

Final Preparations and Closing Day

As closing day approaches, a title search is conducted to ensure the property’s title is clear of any liens, claims, or encumbrances that could affect ownership. This investigation reviews public records, including deeds, court records, and property tax records. Following a successful title search, title insurance is typically purchased, which provides protection for both the buyer and the lender against unforeseen challenges to the property’s ownership.

A final walkthrough of the property is performed by the buyer, usually within 24 to 48 hours before closing. The purpose of this walkthrough is to confirm that the property is in the agreed-upon condition, any negotiated repairs have been completed, and no new damage has occurred since the inspection. It also allows the buyer to ensure all included appliances are present and functioning, and that the home is generally clean and ready for occupancy.

Before the closing appointment, the buyer will receive a Closing Disclosure (CD) from their lender, a document detailing all final loan terms, projected monthly payments, and an itemized list of all closing costs. Federal regulations typically require this document to be provided at least three business days before the scheduled closing, allowing the buyer ample time to review and understand all financial aspects of the transaction. This mandatory review period helps prevent last-minute surprises regarding costs or loan terms.

Finally, closing day marks the official transfer of property ownership. This appointment typically takes place at the office of a title company or an attorney, and attendees usually include the buyer, seller, real estate agents, and the closing agent. During the closing, numerous legal documents are signed, such as the promissory note, mortgage or deed of trust, and the deed itself, legally transferring the property from the seller to the buyer. Upon successful signing and the transfer of all required funds, including the down payment and closing costs, the keys are handed over, and the home officially becomes the buyer’s property.