An offer has been made, and you have accepted. The sale of your home is now underway…what next?
When selling your home it’s difficult to know how lengthy the wait may be for the right buyer to come along. However, once you have an offer that you’re ready to accept, the wheels set in motion can begin to roll rather quickly. If you’re unsure what comes next after being under contract, the selling process can be rather daunting. Knowing what to expect from the beginning through the end, will make moving on to what comes next in your residential journey, a much more exciting and enjoyable experience. Below is a brief overview of the transactional process for the seller:
The Beginning. In the beginning both sides of a real estate transaction enter into the attorney review and inspection process. The attorney review is focused on the negotiation and possible amendment to the real estate contract terms, while the inspection process targets potential issues with the property that the buyer may request to have repaired or replaced. While in the attorney review and inspection period, the contract remains contingent on whether both parties can come to an agreement on the requested changes to the contract and inspection issues noted on the property.
As the owner of the property, it can be easy to take personally certain requests for repairs. That flickering light never bothers you, so why should it bother the new homeowner? Luckily, it is not the seller’s job to negotiate these requests; it is their attorney’s job to communicate those concessions you are, and are not, willing to make. But, make no mistake, your attorney is your advisor and the messenger – all decisions on any compromises made, if any, should always be yours. Once the attorney review and inspection process are complete (typically within the first 7-10 days from the signing of the contract), the parties move on to the mortgage contingency period.
The Middle. As the seller the mortgage contingency period is a concern because the real estate contract is now conditional on the buyer being able to obtain a mortgage on the property. A “mortgage contingency” is a provision in the real estate contract, which provides that if the prospective buyer cannot procure a mortgage within a fixed period of time, the buyer may cancel the real estate contract and receive a refund of any escrow money. Most buyers will have a conditional loan commitment at the time their offer is made and accepted. However, the buyer is still responsible for the submission of certain documents and the lender’s underwriter must give their approval. During this period, all parties must await the lender’s “clear to close.” Once received, the parties can move on to the closing on the property.
The End. The focus now shifts back to the seller, or more appropriately, the seller’s attorney. Prior to closing, the Seller must ensure that the title on the property being transferring is free and clear of any liens or encumbrances against the property, such as back taxes, mortgages or mechanic’s liens, that need to be paid off at closing. In order to do so, the seller’s attorney will conduct a title search. Any issues raised in the title search are to be cleared by the Seller or the Seller’s attorney. For example, if there is an outstanding mortgage on the property being sold, the Seller will need to present the title company will a mortgage payoff letter from the current lender. Payoff of the seller’s existing loan is made with the proceeds from the sale, which is completed by the title company at the time of closing. Once the mortgage lien is paid, it is cleared from title, and the title acquired by the buyer is clean.
The Seller’s attorney is also tasked with preparing the documents needed to transfer title from the Seller to the buyer. Title is distinct from possession. Title is evidence of ownership, put into tangible form by way of the deed. The deed transfers right, title and interest of real estate from a seller to a buyer, at closing. While the deed is the most significant of the documents required for closing, the seller must also present the following title documents, in order to complete the transaction: Bill of Sale, Affidavit of Title, ALTA statement, and transfer tax declaration.
From listing your property to close, the sale of a home can be a roller coaster if you’re unprepared for the process ahead. Knowing what to expect can help you to maintain control, allowing the other aspects of your life can continue to move forward without interruption. Having a real estate attorney on your team is a critical step in ensuring your real estate sale is done right. At the Law Office of Kathryn M. Madda, our goal is to make your life easier by ensuring that all the necessary steps in the process are covered. If your looking to sell, or your property is under contract, contact us today at firstname.lastname@example.org or 312.834.4230.