What is the Real Estate Process After a Contract Is Signed?
- If the buyer elected in the contract to have the home inspected, the inspections will be ordered very shortly after the contract is signed. The inspector will examine the structure of the building and determine whether or not the home's systems -- electrical, plumbing and heating/cooling -- are functioning properly. He'll also look for signs of poor drainage. Water and air quality tests also may be done, and the inspector may look for signs of termites, too.
If the inspections show that repairs need to be made, the buyer and seller will negotiate a solution. The buyer may agree to to accept the house as is, for example, or the seller may agree to do some or all of the repairs or reduce the sale price so that the buyer can make the repairs later, after closing. - The buyer must apply for financing within the period of time specified in the sales contract. One to two weeks is common. The earlier the application is made, the better. That way, if the lender requires additional documentation later in the underwriting process, the buyer is more likely to have time to submit it well in advance of closing.
- The buyer's title company will investigate the home's chain of ownership to determine whether or not another party has any claim to the property. If another party does have claim, the title company will work to clear the title. However, the only guarantee of a clear title is title insurance. If the buyer is borrowing money to finance the purchase, her lender will require that she order title insurance on its behalf.
The title company also may conduct the closing. If so, the title agent will work with the buyer's and seller's real estate agents and the mortgage consultant to collect the information it needs to prepare closing documents and distribute money from the sale. - If the buyer is financing the home purchase, his lender will require that he take out homeowner's insurance, sometimes referred to as hazard insurance, for the sake of protecting its investment. Although the buyer isn't responsible for insuring the home until closing, it's prudent to start shopping for a policy early, as many sales contracts are contingent on the home being insurable. If the condition of the home makes it uninsurable, it's better to know sooner rather than later.
- The transfer of ownership from the seller to the buyer occurs at closing. The closing is scheduled as soon as all the terms of the agreement of sale and all the conditions of financing have been met. When the parties arrive at closing, the seller still owns the home. When the parties leave the closing, the buyer owns it.