You spent weeks scouring Chicagoland neighborhoods with your broker. You read all of the real estate blogs, and spent hours marking “Interested”, “Not Interested”, and “Maybe” online. Finally, your home search is coming to an end.
You’ve found your dream home — and you’re under contract to purchase it.
Once you’re under contract, what’s still in store before you can finally call that new home your own?
For prospective buyers, here are some of the important steps to consider as you prepare to move from contract to closing:
1.) Getting All the Pieces in Place
Once your offer is negotiated and accepted, you’re officially under contract. Now it’s time for you and your real estate team to really get the ball rolling. In the first several days after going under contract, here’s what you’ll need to focus on:
Initial Deposit of Earnest Money
Depending on what’s specified in your contract, you’ll likely have a few days to send the check for the initial earnest money to the escrow account holder, with the balance to follow later on. This initial earnest money deposit is a show of good faith, to indicate that you are committed to following through on the sale. The escrow account holder may be the listing brokerage, the title company, or the seller’s real estate attorney. Be sure to obtain a receipt when you deposit this earnest money. Throughout the contract to close process, it’s important to keep a close eye on all of your records and paperwork.
Schedule an Inspection
Scheduling your inspection of the property is another step that should be taken quickly after going under contract. Typically the contract will limit the number of days you have to complete this step. This critical component is also an important input to the attorney review process. This inspection gives you the opportunity to have a trained professional examine the property, giving you an insight into the home and informing of you of any updates or repairs that may be necessary. You and your real estate team may ultimately decide to make the sale contingent on making repairs as a result of the inspection.
Attorney Review and Negotiations
Shortly after the inspection, it will be important to make time to meet with your real estate attorney. Prior to closing, your attorney will be in close contact with the seller’s attorney, taking on matters such as performing a title search, prorating property taxes and assessments, and ironing out details not fully outlined in the contract. After the inspection, you, your attorney, and your broker may also choose to negotiate with the seller and their team over any remedies that may be required, based on deficiencies discovered by your home inspector.
At this point, your team and the seller’s will work together to finalize the purchase agreement, so that the sale can move forward. Once the inspection and attorney review periods are completed and all parties are satisfied to proceed, it will typically be time to pay the remainder of your earnest money, the amount of which will be defined in your contract.
2.) Going Through the Appraisal Process
Around this time, you’ll also want to turn your attention towards finalizing your mortgage application. It will be important to sit down with your loan officer to finish up your application and move the process forward. Your mortgage lender will let you know what information or documents they need.
Shortly thereafter, it will be time for your lender’s appraisal of the property.
Mortgage Lender’s Appraisal
Have you ever heard the expression that you need to sell a home twice? The first sale is of the property itself — and you’re the buyer. Now, it’s time for that second sale — which you might think of as “selling” your mortgage lender on giving you financing.
Essentially, the bank or mortgage lender wants to ensure that the property is worth as much as you have agreed to pay for it. The lender wants to protect themselves from potentially losing money, by making sure that it makes financial sense to grant you a loan.
In the appraisal, the mortgage company will send an appraiser to perform their own inspection and assessment of the home, to determine its potential value. Receiving the results of your appraisal from your mortgage company may take anywhere from a few days to a few weeks.
Getting Back the Results of Your Appraisal
If your appraisal comes up short, there are certainly options available to you to keep the sale moving forward, including seeking a different financing method, increasing the amount of your down payment, or securing private mortgage insurance. You may need to confer with your loan officer, attorney, or real estate broker to determine the strategy that will work best for you.
If the appraisal comes back in your favor, affirming the value of the property, then your lender will begin to work on preparing and issuing your final mortgage approval also called a “clear to close” notice. Once you have the results of your appraisal and your “clear to close” in hand, you’re in the home stretch!
3.) Finalizing Everything at Closing
Finally, it’s time to tie up the loose ends and wrap things up — so that you can take possession of your new home. At this point, your attorney and the seller’s attorney will finalize the date, time, and location of closing, and provide you with a final estimate of financial figures, including closing costs and cash flow.
Packing and Moving
While you’re in a holding pattern with your mortgage lender, waiting for the “clear to close” notice, it may be a good time to turn your focus to moving house. Think about all of the steps that may go into moving from home to another, including transferring your utilities, getting kids and pets ready for the transition, getting rid of the household items you don’t need, and packing and shipping what you do.
Take a Final Walkthrough of the Property
Shortly before your closing date, you will get the chance to take a final walkthrough of the property, to make sure that the property is move-in-ready, and you’re completely satisfied in taking possession of the home.
Attend the Closing
Finally, it’s time to sit down at the closing table. Your attorney, and, likely, your broker will be present, to help walk you through all of the mortgage and title-related paperwork that needs to be completed. This is also the time when some closing costs will need to be addressed. You’ll take possession of the keys. Congratulations — with all this said and done, the home is now yours!
We Make Owning Easier
At Baird & Warner, we’ve been helping clients sell and buy homes in Chicagoland for more than 160 years. Our full-service “One Company” approach offers residential sales, mortgage, and title services all under one roof — because we know it gives our clients a far better experience. This is just one way that Baird & Warner helps turn a complex process into one that’s easier, at every step of the way.