Under Contract On a House, What Happens Next?
Buying a house is a long-drawn-out process that is incredibly stressful. In fact, roughly 40% of Americans say that buying a house is the number one most stressful event in all of modern life.
While there is little that can be done to make the process any quicker or less complicated than is, understanding the different steps in the process can help you to feel less stressed. There are a few things that happen next when you go under contract on a house.
After you've made an offer on the house and the seller accepts, the deal is likely "under contract."
What does it mean to be under contract on the house? Let's take a look at everything that you need to know.
What Does "Under Contract" Mean?
When a house is under contract, it means that an offer has been made on the home by a buyer that the seller has accepted. However, the sale is not yet final as there are a number of things that need to happen before the closing. Typically the home will be listed as contingent or pending. Pending usually is a better signal the property is headed to the closing whereas contingent means there are other conditions that need to be met.
Before the sale is finalized, all contingencies in the contract must be met.
How Do Contingencies Work?
In real estate contracts, there are four common types of contingencies. After the buyer submits an earnest money deposit into escrow, some of these types of contingencies might need to be dealt with.
If a buyer needs to obtain a mortgage from a lender in order to buy your house, a financing contingency will appear in the contract. It's likely that the buyer already submitted their mortgage approval letter to the sellers, now they need to pass all the conditions. In most scenarios, the buyer has already been preapproved by the lender at this point. However, the financing has yet to officially come through and needs to before the sale can be complete.
The lender is motivated to have an appraisal to make sure that the amount of money that they are loaning to the buyer for your home is a fair market value. The appraiser will go into the house and value the home as it compares to other properties. If the appraisal comes back under the agreed-upon price, you and the buyer can negotiate or the buyer can walk away.
Most buyers will have a home inspection done to a house they are buying. An inspection contingency allows buyers to negotiate or walk away if the inspection comes back with issues that need to be repaired.
Home Sale Contingency
Often times, buyers are both buying your home and selling a house at the same time. Basically, the home sale contingency says that they will buy your house but only after another property that they own is old.
Financing, appraisal, and inspection contingencies are quite common in real estate contracts. Home sale contingencies are not unheard of but they are less standard.
What Still Needs to Happen For the Transaction to Be Completed?
As mentioned before, all contingencies need to be met in order for the sale to be finalized. Depending on the contract, this could include financing, appraisal, inspection, and/or home sale contingencies.
Depending on your own circumstances, more or less of the process might be underway by the time the house is under contract. In general, though, you will need to ensure that the following actions are taken once you are under contract on a house.
Complete Your Mortgage Application
It is incredibly common for people to buy houses with a loan that they received from a mortgage lender. If this is how you are financing your home, and you haven't yet finished your mortgage application, this is one of the first things that you will need to do. You'll want to take note of the fact that many contracts specify a certain amount of time that you have to complete your mortgage application.
You'll also want to get started on this process as quickly as possible because the mortgage process can go on for weeks.
Schedule Your Home Inspection
You can check in with your real estate agent about scheduling a home inspection. They will be able to recommend a licensed home inspector if you don't know one and prepare you for what the home inspector is likely going to look for.
There is a limited amount of time, as specified in your contract when the inspection contingency is valid. This means that you will want to make this a top priority.
As the buyer, the home inspection is a wonderful opportunity for you to understand what exactly it is you are buying. Any issues that might not have come up during the showing or disclosure process will hopefully be revealed during this time. Barring any big home inspection problems, you are likely going to be able to work something out.
When you are buying a house you are making an enormous financial commitment. One of the worst things that could happen is that you purchase a property that has problems that you don't know about. While I home inspection can be quite stressful for the seller, as the buyer you should welcome this opportunity to learn as much as possible about the property.
Request a Homeowner's Insurance Quote
Another thing that you will want to do right away is to request a homeowners insurance quote. It is recommended that you start this process within one week of signing the contract. If you don't currently have homeowners insurance, you can talk to your real estate agent and asked him for referrals.
When you find a homeowner insurance quote that is acceptable to you and that you accept, you'll want to pass your insurance information to your lender. It is common to pay the first full year's premium at the closing. On top of that, lenders frequently require that your escrow account contain a few months' worths of premiums.
Sign Your Loan Documents
Usually, there are pre-closing documents that you will need to take a look at and sign. They will be sent you by your mortgage lender. You want to take note of any changes as you will be signing the final copies at closing.
The Appraisal Will Be Scheduled
After the infection has occurred, most lenders are going to want a home appraisal. A home appraisal is frequently required by the lender in order to find out the current market value of the home. They want to ensure that they are not loaning the buyer more money than the house is worth.
It can take between one and two weeks to get back the results of an appraisal. If you are getting a VA appraisal, this can even take longer. Though the lender is the one who orders the appraisal, the buyer is the one who pays for it. They are paid for upfront with a nonrefundable fee.
A home appraiser is a professional whose job is to look at the home from an objective point of view and determine the fair market value. They are not supposed to be swayed by subjective or aesthetic aspects of the home but they are rather making a determination based on the bones of the house and property.
If your appraisal comes in too low, there are a number of things that you can do. As a buyer, you can renegotiate the contract terms with the seller. If there is an appraisal contingency in the contract, you also likely have the option to walk away from the deal entirely.
If the seller is not willing to negotiate, it is also possible when you're buying a house to put down a bigger down payment so that the mortgage lender is lending you a smaller percentage of the asking price.
Take a Final Walk-Through
During the house buying process, it's likely that during negotiations it was determined what repairs would be made or which objects would be removed from the property are left behind. During the final walk-through, you have the ability and opportunity to make sure that the house is in the condition that you had agreed upon with the seller.
Prepare For All Closing Funds and Documents
Before you attend the closing, you'll want to get together any necessary funds and appropriate documents. Your real estate agent can help you to understand which documents you need to bring and how much money exactly should be wired to the attorney performing the closing.
In the Final Closing Disclosure, the required amount of money will be included. Before the closing, you'll want to wire any necessary funds 24 to 48 hours before the closing time. This is just to ensure that everything goes smoothly and nothing gets delayed.
Another thing you want to be aware of is the fact that there has been an increase in wire fraud recently. You should stay on your toes in terms of last-minute instruction changes or anything that seems suspicious. The safest thing to do is to confirm the wire instructions over the phone.
Set Up Utilities
One of the things that you want to do a couple of days before you move into your home is to turn on all of the utilities. You can always get in touch with the listing agent in order to find out who the seller's utility providers are. You can then decide whether or not you want to stay with the same providers or find new providers.
Things like gas, electricity, cable, water, phone, and Internet are all things that you will want to have set up right when you move in.
Attend the Closing
You made it! The closing day has finally come and you have almost completed buying a house. The closing usually happens at the closing attorney's office.
This whole process takes about an hour and required you to sign your closing documents. Once everything is signed and money has been handed over, you will be handed the keys to your new home.
Move Into Your New Home!
You might think that it would never happen but you are finally here. It is time for you to move into your new home. Congratulations!
Whether you are moving between houses in the same neighborhood or moving across the country, getting organized for your move is something that you will want to start early on. If you are going to be hiring movers, you will want to set this up as soon as possible to ensure that they are available on the day that you want to move.
Before moving in, you'll also want to have a plan for where all of your belongings are going to go. Measuring the floor plan and finding spots for each piece of furniture can help to make moving less stressful.
For those that are moving to the area, we are happy to help in any way we can!
If there are any repairs or upgrades that you want to make before moving into your new home, it can make a lot of sense to get these done before you are living in the house. It is surprisingly difficult and disruptive to be both living in a space and working at the same time.
You'll also want to take the opportunity when the house is completely empty to do a deep clean. Whether you and your family do that yourself or you hire a professional cleaning service, you may as well start off you're new life in your new home on the right foot.
Additionally, you'll also want to change your address with every person and institution that regularly sends you bills or letters. It can also be good practice to change all of the locks on a new house.
Under Contract? We are Here to Help!
Whether you are selling a house or buying a house, uphomes.com has all of the resources you need to help make your Charlotte, North Carolina real estate transaction as smooth, simple, and pleasant as possible. If you're under contract on a new construction home the process is typically much easier as the builder will make all the repairs for you. You can view new construction homes for sale on our website.
Are you looking for a new home? You can find homes for sale in the Charlotte area right here with our convenient and easy to use real estate website!
Hi there! My name is Ryan Fitzgerald, and I have a passion for everything real estate! My goal is to help you learn more about real estate through our Real Estate Blog whether it's the best places to live, move to or invest in real estate! Hopefully, you enjoyed the above blog post and it found a way to provide help or value to you. When you're ready to buy or sell a home of your own please let us know here at uphomes.com as we partner with only the best Realtors® all across the country. Also - Please feel free to join the conversation by dropping us a comment below... We love comments!