12 Step Guide to Getting Your Home SOLD! Step 11: Understanding "Under Contract" and "Closing"

By
Real Estate Agent with Reece & Nichols

12 Step Guide to Getting Your Home SOLD!

 

 

 

Welcome Back, Savvy Home Sellers!

 

 

Today, we begin Step 11 of my 12 Step Guide to Getting Your Home SOLD.  Last time, in Step 10, we discussed home inspections and what they mean for a home seller.

Step 11: Understanding "Under Contract" and "Closing"

Under Contract and ClosingToday, we will discuss what "under contract" and "closing" mean for you, the home seller.  Once a buyer has decided to buy your home and the offer has been accepted, it is time to move toward closing.  This part of the home selling process can be a little confusing, so we will be explaining it today.

Under Contract

Once both the buyer and the seller have come to an agreement on the sale of the home, the property is considered to be "under contract."  This does not mean that it is sold, however.  When a contract is accepted, there may be contingencies in place.  Contingencies are anything that must happen first in order for the house to be SOLD.  The three most common contingencies are inspections, the buyer obtaining financing, and appraisals.

 

 

 

Inspection Contingency: During the "under contract" period, the buyer can bring an inspector to the home.  If the inspector's report lists material defects that require replacement or repair, such as the roof or the HVAC system, the buyer can further negotiate with the seller, and if no agreement is reached, the buyer may walk away from the contract and the house will have to go back on the market.

Buyer Obtaining Finance Contingency: When buyers are obtaining a mortgage loan to pay for the house, during the "under contract" time, the buyer's loan officer will qualify the buyer again for the loan; the loan officer will analyze several factors including the buyer's credit scores, debt/income ratio, and employment, to be sure that the buyer still qualifies for the loan amount.

Appraisal Contingency: The loan officer will start the mortgage paperwork and order an appraisal on the home.  The appraiser works for the bank and verifies with different appraisal techniques that the sales price reflects the market.  This is why in today's market it is so important to price the home for sale correctly; due to foreclosures and short sales, prices are being dragged down, and even if you find a buyer willing to pay the asking price, if the home does not appraise for the sales price, the buyers will not receive financing.  Only when all of the requirements are met according to the bank's underwriter, the buyer will finally be approved to receive the loan and can proceed to closing.

It is very important for sellers to understand that "under contract" does not mean SOLD just yet.  Sellers should consider not moving all of their things out of the home or committing themselves to another step in their lives before certifying that all the contingencies of the contract, especially the three most common contingencies (inspections, buyer's financing, and appraisals) are met.  Only after the contingencies are met is the sale secured and ready to close.

The period of time between "under contract" and closing day can vary.  It can take three days if the property is being paid for with cash, or 30 days if the buyers are securing financing, or even longer if agreed upon by both parties and/or if extra inspections and paperwork are needed.

Closing

When a home seller thinks of closing, one of the first things that may come to mind is how much he will net after paying closing costs.  These closing costs, along with other costs of selling a home, are certainly realities of the home selling process.  The closing date is very exciting for both buyers and sellers.  At closing, a home seller can expect to sign the necessary paperwork to transfer ownership of the home, pay all closing costs, including paying off his mortgage, and transfer the keys of the home to the buyer.

Closing Location: Closing typically takes place at the office of a title company.  The title company is the entity that will do a search on the title to make sure that there are no liens against the proerty, and that the correct owner will transfer ownership.  The title company is also responsible for disbursing the money related to the transaction, by accrediting or debiting different amounts to or from the parties involved on the sales of the property.  One of the reputable title companies in our area is Kansas City Title

After a buyer has made an offer on your home, you have completed the negotiation process, and an offer has been accepted, you may think the home selling process is complete.  However, you as the seller must still go through the process of your home being "under contract," during which inspections, buyers' financing, appraisals, and any other contingencies, which may still potentially cause the contract to fall through.  Once the contingencies are met, the buyer and seller will move toward closing, where the sale of the home is finally complete.

 

Next time, we will discuss buying a new home during or after selling your home.  It's the last step of my 12 Step Guide to Getting Your Home SOLD!  Once you decide to sell your home, you will likely be looking to buy a new home, and you may find yourself buying a new home after your home is sold, or even while it is still being sold, ore even while it is still being sold.  You'll want to stick around for this one!

 

Until Next Time,

Ana Spradling, Your Realtor with Real Results

 

When you are experiencing the closing portion of the home selling process, you want a Realtor on your side who will assist you with overcoming any obstacle that may come up during the "under contract" period and get your house SOLD!  As your listing agent, I will educate you and assist you through all the steps of the selling process all the way to the closing day.  I will be committed, with your best interests in mind, to do what you hired me to do-get your home SOLD!  Learn more about my services to home sellers and request a free in-home marketing presentation today!  Contact me at (913) 954-7123or at ASpradling@ReeceAndNichols.com.

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 Ana Spradling Your Realtor with Real Results


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Comments (1)

Keith Wimberly
Louisiana Mortgage Associates - Lake Charles, LA

Great information for first time home buyers and sellers!

Nov 16, 2011 03:44 AM