You have successfully gotten an accepted offer: it may have been a quick simple negotiation or it may have been a bit of back and forth, but either way you have officially gotten past one of the biggest parts of the home buying process!
Now you must know and any reputable realtor will tell you that just because your offer is accepted, it does not mean that the house will stop being shown so you must move quickly through the next few steps to secure that home.
Often, anyone else who views the home will be told that there is a first accepted offer, yet they can still place offers which will be presented to the homeowner. Lower offers will be held as "back up" offers, but there is always a chance someone will outbid you and their offer may have terms that the owner may prefer. I will usually recommend to my sellers to stay with the first offer, mainly because sometimes they may have outbid their first buyer to get in, and could drive the price down with concessions or changes.
That is the reason why time is of the essence so you're going to want to get things done as quickly as you possibly can. This is not to rush the sellers but to show them that you are serious.
Step 1 - Sales Agreement & Attorney Review
This is a very standard form and is very important to your purchase. This is really sometimes the first step, but if you have had to negotiate and make changes to your original offer you will want to fill out a new updated one to send over to the attorneys. The buyer and the seller will fill this out independently and receive a copy. Your attorney will typically review this document without any changes, because the contract will have the specifics credits or add-ons.
Step 2 - Call Your Mortgage Broker
Your realtor should have already developed a relationship with your mortgage broker to be sure this is a home that you can afford with the sales price, taxes, and insurance. If they have not spoken to them they shouldn't wait any longer to get that relationship going. I personally like to have a direct line of communication open from the moment they give you the okay to go out and start looking.
Sometimes the seller will want you to get a second mortgage pre-approval which is not unusual in my business, because I work for a company who has their own mortgage company. A seller cannot, however, tell you who to get a mortgage with—they can only request a pre-approval through a specific company.
This is not to say that using a mortgage broker your agent has not yet worked with will cause a problem. I have had many deals go perfectly with mortgage companies I had not previously worked with.
Step 3 - Home Inspection
Many companies will have a preferred list of home inspectors, if you already have someone. You want to have the home inspection as soon as possible, even with a first accepted offer. A home inspector should check for, of course, the obvious red flags: mold, mildew, termite damage, but you also want them to check some other things you may not think of. Most will check to make sure that the hot water actually gets hot—in older home this will take a bit longer but these are things that once you move in can become important. They will also check things in the attics, basements and crawlspaces.
Homes that are remodeled usually only take about an hour for a full inspection, and others usually take about two hours. You will get a full copy of the report, and they will talk to you about it before they leave the property.
Step 4 - Sign The Contracts
Now depending on how your home inspection went sometimes you will be just going in to sign contracts with no changes, but sometimes there will have been more changes because of things that came up during your home inspection. Remember your offer is still accepted, but now you are going to be changing the terms.
I cannot stress what I am going to say enough, and it is what I say to not only buyers but to sellers too: BE REASONABLE!
I can understand if a seller does not want to have to do work to the home they are moving out of, but you can't expect a buyer to just ignore problems that may have arisen during a home inspection. Try and work with the buyer, because no matter who the buyer is they will have a home inspection and you will more than likely be in the same position.
That being said, sometimes buyers should be reasonable and not let fear of losing the house force them to overlook a major problem but also not let a little problem cause you to lose your dream home either.
Step 5 - Bank Appraisal
This again is where a good realtor is key, because the bank is going to come in and make sure the house is worth the money that in reality the bank is putting up for it.
This is what in today's market really is an asset to the buyer, because banks are not easily giving out money the way they did 10 years ago when the prices were really at their highest point. The banks are very careful that the home is worth what you're paying for it.
I personally try and make the bank appraiser's life as easy as possible: I bring my comps to the appraisal ansd although we can't force them to use those specifically, most appraisers will appreciate it and many times end up using them. This depends on the bank and the appraiser but if they feel the realtor has done their due diligence to make sure the buyers are not overpaying, than they will use them.
Step 6 - THE HOME STRETCH
You're ready to close and you will have not much else to do until about a month before your closing!
I will write another blog outlining the things you will need to get in order prior to your closing separate from this one, and attach the link.