The homebuying process can seem intimidating and opaque, especially if you’ve never done it before – but investing in homeownership is one of the best ways to build wealth, and I want to help you get there! This is the last in a 4-part series geared toward informing you about what to expect as you buy a home (check out Part 1: Getting Started, Part 2: Showings, and Part 3: Writing an Offer). A big part of my role as your Realtor® is making sure that you understand and are comfortable with the process – that you feel informed and in control at each step.
Last time, we talked about writing and submitting an offer - but what happens when your offer is accepted?
Part 4: Going from Under Contract to Closing!
Sometimes, the search for the right home can feel like a marathon. You’re doing showing after showing, maybe you’ve made some offers that were not successful. It’s easy to think that once you’re under contract, it’s smooth sailing… when it’s really just the second half of the race. I’m not just with you for showings – my goal is to get you to closing, and I will continue to educate and advocate for you until we get there.
As I mentioned in the last installment, the closing period in Colorado is commonly 30 days. In this time, you have some tasks to keep the contract moving forward:
Step 7: You’re under contract!
Once the seller(s) have signed your offer, you are officially under contract! I will send you a congratulations email that outlines next steps, deadlines, and things to be aware of as we move forward.
Step 8: Earnest money and loan application
Within 3 days of your offer getting accepted, you’ll have to turn in your earnest money - which is a good faith deposit, usually 1-3% of the list price. These funds are normally held by the title company that is handling the transaction (but can be held by the listing agent’s brokerage instead) and go to your down payment at closing. If you terminate the contract in good faith and within the bounds of the contract, you get your earnest money back. If you terminate in bad faith, the seller may be entitled to keep your earnest money.
Within a few days of contract acceptance, you’ll also want to finalize your loan application, if you haven’t already. Make sure that you are in close contact with your lender and that you’ve delivered to them any documentation that they need!
Step 9: Inspection
It’s usually a good idea to complete inspection relatively quickly, since if there is a major issue with the property, we want to know about it sooner rather than later! Inspectors will take a look at every facet and system of the home - structure, electrical, roof, plumbing, HVAC, and more. The general inspector may recommend a second opinion from a specialist. You the buyer submit an inspection objection to the seller, notifying them of the issues you are asking to be corrected. If the inspection turns up more or bigger problems than you’d anticipated, or the seller refuses to address an issue of importance to you, you can terminate and get your earnest money back.
Step 10: Appraisal
Once we’ve reached agreement on inspection issues, your lender will have an appraiser visit the property to determine the value of the property. This is an important piece of the puzzle: your lender must ensure that the asset they’re lending on is worth what you’re offering, so if the appraisal comes in below the price you’ve offered, you may need to bring extra cash to cover the gap. This is a possibility if you’ve offered over list price. (See Part 3 about appraisal gap coverage.)
Step 11: Final Walkthrough
Right before closing, we’ll do a final walkthrough at the property, looking to make sure the seller has completed any agreed-upon inspection issues and that there hasn’t been any major change in condition since the last time you saw it. We like to do this as close to closing as possible!
Step 12: CLOSING DAY!
From walkthrough, we head to closing – usually held at the offices of the title company that is handling the transaction. Stretch your hands and get your pen ready – at closing, you will sign documents to transfer ownership, utilities, and taxes, as well as loan documents. You’ll want to bring a government-issued ID with a photo. If you are wiring your down payment, you will have already taken care of that, usually the day before. There’s usually a little bit of waiting as funds get transferred and everything gets approved – closing can take around an hour, barring any unforeseen delays. Then, finally, you are a homeowner – congratulations!!!
Want to know more about the contract? You can review a blank one here; if you have questions or want to go over it line by line, let’s connect!
This has been a quick-ish overview of the buyer process! If you have any specific questions, please contact me and let’s talk it through – I would love to be a resource for you.
You can also peek at the whole timeline below:
