Copyright 2006 - 2014
Q - The offer was acceptable and I signed the Purchase Agreement, what now?
Answer - Congratulations! See how easy that was when you worked with a real estate professional. Your Realtor will stick with you through the closing and will keep tabs on the title work and how the other side is doing with the mortgage. You may have been asked to have certain tests done and to provide certain reports on things like the well water and the septic (if applicable).
Your agent can provide recommendations for companies to do the work and provide the reports. You may also be asked to pay for tests that you don’t want to have done or don’t want to pay for and you are well within your rights to refuse the requests, if they were not part of the original contract. Keep in mind that your multi-thousand dollar deal could be put in jeopardy due to your refusal to shell out a couple hundred dollars for a test that the buyer feels needs to be done.
After the home inspection, the buyer may send you in writing results from tests or inspections that were unacceptable to him/her and you will have a limited amount of time in which to respond. You may respond by indicating how and when you will fix the problems or you may respond that you do not intend to fix the problems and they must accept the house “as is”. In that case, you may wish to offer the buyer a concession of some dollar amount so that he/she can get the problem fixed or you may just refuse to fix the problem or offer a concession. The key here is not to lose the sale over small stuff. Just make the small repairs and get on with the sale.
The buyer usually has the right to walk away from the deal and get his/her earnest money back if you refuse to either fix the problems or offer an acceptable concession. Read through the home inspection clause in your contract to review your rights and those of the buyer, as well as the issue resolution process that must be followed. A well-coached buyer will not be nickel and diming you to death with lots of niggardly little issues; so, hopefully you can focus on the important things that may have been uncovered.
If your agent hasn’t already done so, he/she will order the title search from the title company that you have agreed to use. That search will turn up any issues, liens or other “clouds on title” that may have to be dealt with before closing. The buyer should be provided with that report to, so that they can review it for anything that they can’t live with. You don’t want to wait until the closing to see the title insurance policy. It’s may be too late then to correct anything objectionable without delaying the closing.
Your agent will also stay involved with coordinating things for the buyer, such as scheduling the appraisal. He/she may put together some examples of good “comps” for the appraiser to use and may even meet the appraiser at the house to pass those on. If there was anything that your agent noticed that might need to be done before the appraisal they should have already mentioned it to you by now. Realtors generally know what the appraisers doing different types of appraisals (Conventional, FHA, VA or USDA) might be looking for an can help you get the house ready for their requirements.
Your agent will also advise on any negotiations that might take place during this time, such as agreeing to make repairs that the home inspection might have uncovered or negotiating a price change if the appraisal comes in low. If there is any need to extend the time frames of any of the terms or conditions of the original Purchase Agreement, your agent will represent you in negotiations and arrange for you to sign any documents.
The main show-stopper issues that usually come up during this time are major defects uncovered by the home inspection, a major miss on the appraisal value or some big unknown issue that shows up during the title search. The key to success here is DON’T PANIC. Your Realtor will work with you to devise a strategy to handle the issues. In most cases you have a buyer who is just as interested as you in resolving the issues and moving on to closing. You need to be looking for a win-win solution to the issue. If you’ve hit a big snag it may cost you big money to resolve the issue and that may require that you re-think your position. Can you still afford to sell, if you have to concede that amount off the price or put that much into repairs?
If the show-stopper issue is a major miss on the appraisal value and you don’t think the appraised value is correct, you may challenge the appraisal results and can see if the buyer’s lender will entertain having a second appraisal done. They may require that you pay for that second appraisal, so understand what the cost is and what the probability of it making a difference really is. You can ask to see the first appraisal, but the buyer doesn’t really own it or control it and the lender is under no obligation to share that with you. If you do get to see it, look to see what comps were used and how good of a fit they really are to your house. Also look at the adjustments that the appraiser made and make sure that your house got credit for all of the positive things that should have added value. It may surprise you how little value is added by something that you are very proud of in your house. Ask your Realtor if he/she thinks a second appraisal will make enough different to be worth the cost. Here’s a good read on appealing your appraisal.
If the issue is a major repair that is needed, get 2-3 quotes for the work and then see if the buyer will split the cost with you. Many times, once you can show the buyer the cost involved, they will agree to some price reduction that is less than 100% of the projected cost and agree to do the repairs after closing. Sometimes the issue is such that the buyer will insist that it must really be remediated prior to closing, so bite the bullet and get it done. After all, you don’t want to live in a house with that major problem do you? How could you face your family if you decided not to sell because you won’t clean up a major mold issue or put in a Radon
Assuming that you’ve gotten everything squared away or reached agreement with the buyer on things that he will do later, you will enter a waiting mode, during which you can plan your move to wherever you are going next. Prior to closing your agent should be able to get for you a pre-closing packet that will allow you time to go over the documents, perhaps with your attorney, ahead of time. Pat close attention to the HUD-1 statement, which shows all of the costs involved and where the money is going. It is not unusual to find minor errors in the paperwork which can all be fixed before closing. Make sure that your name is correct on all the documents and that the property ID is correct. Your Realtor will can go over all of the documents that you’ll need to sign for accuracy, too.
Your agent will be at the closing, in the room with you to answer any last minute questions and help with any issues that arise there. He or she will be hoping that you now clearly see the value in having a real estate professional involved in the process and will recommend them to your family and friends.