Having your offer accepted feels great—but for most home buyers, it’s just the beginning. There is still a lot more to be done before you’re over the front threshold. Here’s a rundown of what comes next.
1. “Earnest Money”
There needs to be some cash involved at the beginning of a transaction to protect the seller’s interests while they take their house off the market. “Earnest money” is your way as a buyer to prove to the seller that you “earnestly” want to purchase their home.
Some realtors will collect earnest money from you before they submit your offer and others will do it after it’s accepted. Whatever your situation is, make sure that your earnest money is delivered on time and in the proper payment form. You can most likely find this information in your sales contract.
2. Property Inspections
Once you have an executed sales contract in hand, the clock starts on your inspection period. Make sure you know how long that period is, and complete your inspections in a timely manner. There are multiple types of inspectors that you may need to schedule. A standard home inspector is the most common but radon, pest, septic, structural, HVAC, and mold inspections may also be relevant to your buying situation. Make sure that you have resolved any inspection issues within the time allowed in your sales contract.
3. Lender Documents
As soon as you have an executed sales contract, you will need to communicate with your mortgage lender so that they will start the mortgage process. Be prepared to provide lots of documentation throughout this transaction. Make sure that you get the requested documentation to them ASAP to limit any potential problems. Some lenders don’t check in with you to keep you updated on their progress, so make sure that you check in with them to verify that they are on track. Your realtor should help you with this as well. If you stall on any requested lender docs, you can be sure that the finger will be pointed at you if they are not ready. Avoid this situation by promptly providing any documentation to your mortgage lender in a timely manner.
4. Title Commitment
A Title Company will issue a title commitment that reviews the history of the property and discloses any liens against the property that need to be resolved... Be sure to review your title commitment and ask an attorney for advice if you see anything in it that looks concerning. Most title commitments are straightforward and require no additional work on your part. Just be sure to review it thoroughly before moving on to the next step.
Once you have cleared the inspection process, let your lender know. They will order a home appraisal to verify that the value of the home you’re purchasing is worth the loan amount. In California, buyers have 17 days to complete the appraisal, starting from the day it was ordered. For this reason, it is important to make sure that your lender orders your appraisal as soon as possible. It’s likely that you will be paying for the appraisal, so it’s best to wait until after you have completed the inspection process.
6. Home Owners Insurance & Warranties
Your lender will require you to have a Home Owner’s Insurance Policy on the property that you are purchasing. You will want to shop around and choose the homeowner's insurance provider and policy that works best for you. Once you have the policy in place, let your lender, realtor, and/or title company know.
Also, some seller’s will provide an allowance for you to purchase a home warranty. If you are purchasing a home warranty, you’ll want to shop around and find the home warranty company that best suits your needs. Once you have found the right home warranty provider, be sure that the title company knows who you plan to use.
7. Turn On Utilities
Now that you are past all of the major steps required to purchase your home, you will want to get your utilities turned on, or transferred to your name. If provided by the seller, you can find all of the relevant utility contact info in the Seller’s Disclosure.
8. Schedule Closing Date & Time
Your sales contract will have an agreed-upon closing date. Make sure that you and/or your realtor have contacted the title company in advance to make sure they have a time slot open that works with your schedule. Some sellers like to close at the same time as the buyers, so your realtor may need to coordinate this with the listing agent as well. This is usually an easy step as long as it isn’t put off until the last minute so that the title company can accommodate your request.
9. Final Walkthrough
It is wise to do a final walkthrough before the closing. Why is this necessary? To verify that repairs have been completed, that all of the seller’s personal belongings have been moved out, and/or to make sure that the home is ready to move into. This is not a time to renegotiate any items on the sales contract. It’s simply a safeguard to make sure that no major issues arise that could cause the closing to terminate; which would likely be followed by legal proceedings to mitigate the issues.
10. Close The Transaction
On the day of closing, you will need to have your government-issued photo ID and certified funds (cashier’s check or wire transfer) for the amount required from you at closing. You will meet at the title company to sign all of the required documentation. A typical closing usually takes less than an hour. Once the documentation has been signed and your lender has funded the transaction, you will be given the keys and the house is yours!