Tampa Real Estate Advice: Your Home Is Under Contract!
WHOOHOO! At this point we have successfully negotiated a contract for the sale of your home. Now the work really begins. I definitely take more Tums during the contract phase than during any other. You might compare the contract process to an airplane flight. Please fasten your seat belt and have trust in me, your pilot. While we might hit some turbulence, know that I have years of experience navigating this process. I’ll communicate with you during the flight and keep you up to date while preparing you for the next events. We may need to tweak our flight plan along the way, but I’ll get you where you need to go. Bon voyage!
The contract is nothing more than a project plan of sorts, detailing who is to do what by when. When I say “who”, I mean you and your buyer. It is my duty to be on top of all of the dates and tasks. I will provide you with the timely communication and guidance you need to comply with your contractual obligations. So, let’s get started.
Once your home is under contract I am required to mark it as “Pending” in the multiple listing service (MLS). Other agents will see this status, and showings will come to a screeching halt. This can be a nice respite from the craziness of showings, open houses, caravans, etc. If we are requesting back up contracts there may still be a few showings.
Two major processes occur simultaneously during the initial phase of the contract period: Inspections and Financing.
Your buyers will work with their agent to schedule home and wood-destroying organism (read: termite) inspections. The inspection period is defined in the contract and is generally 10 to 15 days. I will notify you of the inspection times. It is best that you not be in the home for inspections. The inspections are the buyers’ realm. As long as the buyers agree, I will attend the summary of the inspections so that I can convey findings to you.
If yours is an “As Is” contract, the buyers will complete the inspections during the 10-15 day inspection period and will elect either to continue or cancel the contract based upon the inspection results. Frankly, the As-Is contract offers your buyer a pretty broad out, as long as they communicate their desire to cancel the contract within the inspection period. We will receive a formal cancellation notice that all parties will sign, and that releases the deposit to the buyer. After that, you’re back on the market for Round 2.
Alternatively, the buyers may attempt to renegotiate the sales price or repairs based on the inspection results. Remember though, in an As-Is contract you are under no contractual obligation to make any repairs, but you may find yourself deciding to enter into a new negotiation to keep the transaction together. You may choose to make repairs or reduce the price because you now know much more about your home due to the inspections that your buyer has conducted. Your situation will be unique. We will discuss this fully during the inspection period and we’ll work to provide you with the best possible outcome.
If yours is not an As-Is contract, we will have negotiated a contractual dollar figure for repairs as part of the contract. Your buyer will conduct inspections and will provide us with a requested list of repairs to warranted items, and a copy of the inspection report identifying those items. The contract goes to great lengths to describe warranted and non-warranted items. Non-warranted items are cosmetic items that don’t affect the function of an item, like nail holes.
Per the contract, you will have estimates for repairs, done by licensed professionals – not your Uncle Tony – and will have the repairs completed up to the dollar figure identified in the contract. What happens if the repair cost exceeds the amount in the contract? A few things. The contract can fall apart, or we can re-negotiate the repairs. Once again, your scenario will be unique and we’ll work together to come to the best possible solution for you.
Within the first 5 days of the contract your buyers will be meeting with their lender to complete their loan application. This kicks off the financing segment of the contract. Your buyers’ lender will order an appraisal of your home’s value. I’ll notify you when the appraisal is scheduled, and will almost always meet the appraiser at your home. I firmly believe that it is my responsibility to defend the sale price, and I will meet the appraiser armed with recent sales statistics that support the sale price, along with my best smile and sunniest disposition.
The appraisal is generally done following the inspection. When the appraisal results are in, generally 7-10 days after the appraisal is completed, we will be told if the appraisal is consistent with the contract price. We may never know the exact appraised value unless the appraisal comes in shy of the contract price. Today, appraisals are tricky which is why I insist on defending the contract price personally. I’ve seen good appraisals, as well as bad appraisals that have left me scratching my head. Since home values are going up in the Tampa real estate market, and inventory of homes is lacking, oftentimes buyers are willing to pay a higher price for a home. Unfortunately, appraisers have been slow to reflect increasing home values.
So, what happens if the appraisal comes in low? In many cases your buyer may no longer be able to purchase your home and may need to cancel the contract. Your buyers may also use this as an opportunity to renegotiate the sales price. The buyers may ask you to “split” the difference, in which case the buyer brings additional cash to closing, and you accept a reduced price. This is another unique negotiation that I will walk you through if the need arises, but it’s best to know this much in advance. Trust that I have years of experience with Tampa real estate, and am with you each step of the way.
We’re on to complete the financing process if everything is going smoothly. Your buyer’s lender is collecting information on the buyer, and is completing the underwriting of the loan. We will look for a Loan Approval from your buyer’s lender on Day 30 of the contract period. Sometimes, but not often, things go bump in the night and your buyers are not approved for their loan. Obviously, this is more than disappointing for you and your buyer, and you are both back on the market again. More Tums please.
Other Processes Going On Behind the Scene
So far we’ve not spoken much about the role of the title company. I think of the title company as Switzerland. The title company is the neutral middleman in the transaction. Your title team performs the following functions:
Collect and hold the deposit.
Order and examine the title work to assure that there are no claims on the title of your home, and issue the title commitment.
Order and examine the municipal lien search.
Order the survey.
Obtain your loan payoff information.
Communicate with condo or homeowner associations to make sure payments are up to date.
Communicate with your buyer’s lender.
Create closing documents based on information from your lender, and your buyer’s lender.
Conduct the closing.
Disburse funds to pay off your loan, create the mortgage for the purchase by your buyer, and pay your lovely Realtors.
Occasionally we will run into hiccups during these processes, and if so the contract spells out how they are remedied.
And what are you doing behind the scenes? You’re packing and getting ready to move, of course. I always say that MOVE is a 4-letter word. I’ll provide you with a moving checklist to help you plan. You need to be OUT by closing, and the home needs to be in presentable condition for its new owner.
Closing In On Closing
Yahoo! We’ve made it! Your buyer’s lender will issue a Clear to Close and we will schedule your closing time at the title company. I’ll go over the closing figures with you in advance so that there are no surprises. Of course, we will have discussed your net proceeds during the offer process, so this final number should not be a surprise.
On the day before, or early the day of closing, your buyer will conduct a walk-through inspection of your home. This is not an inspection to find new issues, but instead to confirm the condition of the home is as it was. REMEMBER TO KEEP YOUR UTILITIES ON THROUGH CLOSING DAY. Your buyer will need to have services in order to conduct the walk-through.
Have you done your hand and wrist exercises? This is the day that you sign over your house to its new owners. We’ll meet at the title company at our arranged time and start signing. Remember to bring keys, remotes, as well as some personal identification with you. Your part of the signing takes only 30 minutes, and we can have you out the door. The title company will have your portion signed, and conduct the buyer’s signing as well. Once all documents are signed, they will be forwarded to the buyer’s lender for authorization to fund the new loan. Once that is received the title company will issue all checks and you’re done!
Congratulations! We’ve made a great team. Let’s celebrate our success. Thank you for your trust in me, and your trust in the process. Remember, if you need Tampa real estate advice, or help with buying or selling your next home, contact me today!