What Happens When You Put an Offer on a House?

Making an offer on a house begins a structured process involving communication, negotiation, due diligence, and administrative steps. This journey to property ownership requires understanding various stages and the roles of different parties. Each phase includes specific actions and considerations for both the buyer and the seller, ensuring a smooth transition.

The Seller’s Initial Response

After a buyer submits an offer, the seller and their real estate agent review its terms. The seller can accept the offer, moving the process forward, or reject it if it does not align with their expectations.

A common response is a counteroffer, proposing changes to the buyer’s original terms. If a property attracts significant interest, sellers may receive multiple offers. They evaluate each offer based on factors such as price, contingencies, and closing timelines. Some sellers might set a deadline for “highest and best” offers.

Real estate agents facilitate communication, ensuring offers and responses are conveyed promptly. They help sellers understand each offer and strategize the most advantageous response. This period is time-sensitive, with offers typically including an expiration date.

Negotiating and Accepting the Offer

When a seller responds with a counteroffer, they propose modifications to the buyer’s original terms, such as purchase price, closing date, or contingencies. A counteroffer rejects the initial offer while keeping negotiations open.

The buyer can accept, reject, or submit their own counter-counteroffer. This negotiation continues until both parties reach a mutual agreement on all conditions of the sale.

“Mutual acceptance” means both buyer and seller agree on all price and terms, forming a binding contract. A Purchase and Sale Agreement is then signed. This legally binding document outlines the conditions that must be met to finalize the sale, marking a significant transition from a preliminary offer to a formalized agreement.

The Contingency Period

Once an offer achieves mutual acceptance and the purchase agreement is signed, the transaction enters a “contingency period.” This timeframe allows the buyer to conduct due diligence and ensures certain conditions are met before the sale becomes final. Contingencies act as protective clauses, allowing a buyer to withdraw from the contract without penalty if specified conditions are not satisfied. The duration of this period can range from 10 to 60 days.

The inspection contingency grants the buyer the right to have the home professionally inspected. This inspection covers the roof, visible structures, and systems like heating, air conditioning, plumbing, and electrical. Buyers typically have 7 to 10 days to complete this inspection. If significant issues are found, the buyer can request repairs, negotiate a price reduction, or withdraw from the deal while retaining their earnest money deposit.

The appraisal contingency ensures the property’s appraised value supports the loan amount. Lenders require an appraisal to confirm the home’s market value. If the appraisal comes in lower than the agreed-upon purchase price, the buyer can renegotiate the price, pay the difference out-of-pocket, or terminate the contract.

The financing contingency protects the buyer’s earnest money if they are unable to secure a mortgage loan. This contingency provides 30 to 60 days for the buyer to obtain final loan approval. If the loan application is denied or requirements are not met, this contingency allows them to exit the contract without losing their deposit.

A title contingency ensures the property has a clear title, free from undisclosed liens or legal disputes. A title search identifies any potential issues that could affect ownership. If title problems are discovered, the seller typically has an opportunity to resolve them. If the seller cannot clear the title, the buyer can terminate the contract without penalty.

Throughout the contingency period, all parties work to meet their deadlines. Failure to satisfy or waive a contingency by its deadline can lead to the termination of the purchase agreement. This helps manage risks and ensures all conditions are met before the transaction proceeds to its final stage.

Preparing for Closing Day

After all contingencies have been successfully met or waived, the transaction moves into final preparation for closing day. A primary step is the final loan approval, where the lender gives the go-ahead for the mortgage.

Buyers receive a Closing Disclosure (CD) at least three business days before the scheduled closing date. This document provides a comprehensive overview of the final loan details, including interest rate, total borrowing costs, monthly payment, and funds required at closing. Buyers should review the Closing Disclosure and compare it against the initial Loan Estimate to identify any discrepancies.

The final walkthrough of the property is typically conducted within 24 to 48 hours before closing. This is the buyer’s last opportunity to confirm the property is in the agreed-upon condition, that any agreed-upon repairs have been completed, and that the seller has removed all personal belongings. The walkthrough verifies that the terms of the purchase agreement regarding the property’s condition have been met.

Other administrative tasks include arranging for homeowner’s insurance, which lenders require. Transferring utilities into the buyer’s name and ensuring all necessary funds are transferred to the escrow or closing agent are also completed before the final closing.