You’ve been on the ground, searching for the property of your dreams for months and months. A million different times, you’ve changed your mind about what you want. You’ve driven yourself (and your real estate agent) crazy. All of a sudden, there is silence amongst the noise. You’ve found your perfect space. This is it! You have your agent write an offer. It’s accepted. She says to you, Congratulations! You’re officially under contract. Meanwhile, you’re thinking: Now What?
Purchasing your first piece of real estate is an endorphin you may chase for some time. It’s like a toddler taking his first steps. The pride of it all! At first, your excitement is almost uncontainable. But like a storm in the night, comes the flurry of emotions. Fear, confusion, the what ifs, and what do I do next thoughts can become invasive. Take a deep breath. The homebuying process is a process. I think people tend to forget that.
Background Noise
In the background, your agent will be working. There are lots of moving parts to real estate transactions. She will be scheduling your inspection(s), coordinating the communication between all parties, including the lender and title company. You will have documents to sign and things to pay for.
And if you are financing this deal, that means there are several people party to the ability to close on time. The loan officer and the underwriter, the appraiser, the title company, the inspector, the responses from inspection– the list could go on. So let’s start from the top. Now that your offer has been accepted, here’s what comes next.
Contact your lender.
One of the first things you will do is send your lender a copy of the accepted offer, also known as the Executed Purchase Agreement. Now the lender knows you are officially ready to move forward with the loan process. Make sure that you have all documentation required of you. You want to be in the position where the lender is not waiting for you to do anything on your end.
Cut the check!
Remit your deposit payment to whomever will be holding the deposit. Oftentimes, it is the title company, but can also be one of the real estate brokerages involved in the transaction. Personally, I recommend that buyers have the title company, which serves as a third party, to hold the monies.
Get insurance quotes.
Start calling insurance companies to get quotes. If you’re in Louisiana, those calls should be made to both homeowner and flood insurance companies. Homeowner’s insurance pricing is going to rely on a number of factors, such as your property’s location. And don’t forget, pets cost money. Some policies do not allow certain animals, including specific breeds of dogs. And just in case you were wondering, there are a couple of things you can do to potentially lower the cost of your homeowner’s insurance, including installing a security alarm system and/or a fence.
Inspection/Due Diligence Period
While your agent will have scheduled the inspection, you will likely have to pay for it just after it has been scheduled or when the inspector arrives on site. Your agent is normally present for the inspection. Sometimes both the listing and selling (buyer’s) agents are there. Because the inspection can take a minimum of two hours, I tend to recommend the buyer not come, until towards the end, if the buyer chooses to come at all.
At the end of the inspection, the inspector will go over everything with your agent and discuss the most meaningful of his findings. From there, he will send you and your agent the report. In Louisiana, you are allowed 72 hours from receipt of the report to respond to the seller of the property with your decision. If you are satisfied with things as they are, then you simply sign off that you are ready to proceed with the Act of Sale, or closing. On the other hand, should you find that you are not content with the results of the inspection, your response can be handled in a number of ways.
One option is to ask the seller to address whatever issues you have with the property. You could also ask for a reduction in the sales price. Or, you can ask for cash at closing. If the amount of work is too much of a concern for you, you are able to cancel the deal, and get your deposit back without penalty.
Home Stretch
Assuming you are moving forward, you are now waiting on a few things. One, the results of the appraisal report– which has the power to kill a real estate deal. If the property appraises for more than what you are under contract for, then the transaction can proceed without cause. Contrarily, if the property appraises for less than what you are under contract for, your lender will rescind the pre-approved loan amount. At that point, you will have to either come up with more money to make the difference, renegotiate the price down with the seller, or the deal will be cancelled due to your inability to obtain financing.
Two, the title clearance. The goal is for the title to be free and clear. The title company will hopefully address any potential issues early on, such as a lien against the property or some far away heir that needs to sign off on the sale.
And finally, you are waiting on your lender to utter those magical words: you have been cleared to close. In other words, your loan has been underwritten and come back approved for funding. This information is then provided to the title company, and the title company schedules the closing date.
The Act of Sale.
Closing day has finally arrived. One thing I will say is, a real estate deal is not a deal until (and unless) it closes. Be prepared by readying all monies due. You should have wired your payment, or have your check in-hand to submit to the title office. At the closing table, you will present your ID, your money, and sign a bunch of papers. Sometimes, you may learn that some money is given back to you at closing, so the title company could possibly cut you a check! Sometimes. Don’t get too excited. Anyway, if you have successfully made it to this point, then Congratulations! You are officially a homeowner.
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