What Now? What to Expect After an Offer is Accepted

My Offer Was Accepted! What Now?

You got pre-approved, you followed the advice of your real estate agent, and your offer has been accepted! First of all, congratulations! You can start envisioning your family in your new home, but there are a few things-- and expenses-- you should plan for first. 

We want to lay-out the general timeline for you and what to prepare for after acceptance. Closing costs, escrow, and moving expenses are all things that should be on your radar and accounted for in your budget. Getting your loan approved, the home appraisal and inspection, and the actual closing are all processes that will be completed over the next 30-60+ days as well. 

Loan Approval and Escrow

First up is getting your loan approved: Once your offer has been accepted, and, if you’ve been pre-approved for the loan, you and your agent will gather all of the required documents so that your lender can complete the underwriting process and approve the loan. You won’t sign everything officially until your closing day, but you want to get the ball rolling with this process as it typically takes 50 days, on average, to close. 

If you put down earnest money, it will go into an escrow account once you’re “under contract”. This earnest money is usually 1-3% of the sale price. You’ll be able to put this money towards your closing costs or down payment if the rest of the home buying process goes smoothly. If something happens during the home inspection that compels you to back out, you’ll get your earnest money back (under most contingency agreements). If you decide to walk away for another reason, however, the seller will get to keep this money. Earnest money is essentially so the seller feels confident the sale will go through and can take their house off the market.

Home Appraisal

While that’s happening, your lender will arrange and schedule a home appraisal. An unbiased professional will come to the home, usually within a week, to determine the home’s value. You want the home to be worth MORE than your offer and what you negotiated. Typically, mortgage lenders want to lend between 80 and 97 percent of the home value, which is why most people make their down payments between 3 and 20 percent; if your appraisal comes back at or around the same price you offered, you’re good to go. If the appraisal comes back higher than your offer, congrats, you got an awesome deal! If the appraisal comes back too low, you may have to either increase your down payment or renegotiate with the seller, as the lender may not approve your loan. 

You can always ask to see the appraisal report (and have a right to see it) if the appraisal doesn’t come. Appraisals are substantiated with public property records, comparable homes’ selling prices, area medians, square footage, property tax history, and other public records, so they are usually accurate because of all the data, but you can ask for a re-evaluation if you think there’s been an error and the difference between the appraisal and your pre-approval amount is greater than anticipated. Basically, mortgage lenders necessitate this appraisal process  so that they can make their money back on a resale if you walk away from the home.

Home Inspection

In addition to the appraisal, your home will also require a home inspection. The purpose of this is to flag any issues with the home-- and even allow for you, as the buyer, to back out if major issues arise. Usually, all buyers have a set period of time, which is laid out in the purchase agreement, to have a home inspection completed, once again, by another professional; this is usually seven to 10 days after your offer is accepted. The purpose of the home inspection is to provide the buyer(s) with a knowledgeable and unbiased account of any identifiable issues BEFORE you follow through with the purchase. Home inspections take place while you’re still “under contract,” so if there are major issues that arise, you could back out without a financial penalty, in most cases. By the American Society of Home Inspectors’ standards, the inspection includes evaluating the condition of the following: the foundation, basement (if applicable), and structural components; heating and central air conditioning systems; interior plumbing and electrical systems; roof, attic, and visible insulation; walls, ceilings, and floors; and windows and doors. 

Home inspections, however, do not cover everything. For example, they are not trained in pest and hazardous materials mediation. You may call out a separate specialty inspector to check for these issues, such as termite damage, rat infestations, mold, asbestos, and radon exposure. Additionally, if the home has a septic system or a well, a pool or other additional structures, you would want to call a specialist to evaluate those things as well. It is also important to note that home inspectors are not allowed to physically move anything during their inspection, so it is not a complete inspection, but it does mitigate most surprises. 

You are also responsible for hiring your own home inspector, so ask your real estate agent for reputable ones in the area, survey friends and family, and always ask about their training, accreditation, and licensing, if applicable to your state, as not every state requires them. Interview multiple inspectors and ask questions, like whether or not they’ll walk on the roof and what all they’ll inspect, and ensure you can be there as well. During the inspection, you’ll want to stay out of the way, but it’s always a good idea to be there to oversee it. The seller should also disclose any known issues, so if you are there, you can ask how bad an issue is. If you cannot be there, ask your real estate agent to be present and address any and all concerns you have. 

Financially speaking, the home inspection itself will cost around $300-$500, with additional expenses for specialty inspectors if wanted or needed. The inspector will provide a detailed report, with plenty of pictures, and you can decide how to proceed. Most issues, typically, are small and expected. Even if your house is a new build, there will be some issues, so don’t worry about the number of them listed in the report. With the information from the report, you can proceed with the sale as negotiated prior, you can ask the seller to fix certain issues and/or renegotiate the price to compensate you to address them, or you can walk away from the sale completely. 

Closing

After the inspection is complete and any issues are addressed and/or fixed and signed off on by the inspector, the FINAL hurdle will be closing day! 

Time to flex those hand muscles because you will be signing an extraordinary amount of paperwork at closing. You’ll provide your down payment at closing, again usually 3-20% of the price, and pay for closing costs, which are on average 2-5% of the selling price. In a normal year, you, the sellers, your agents, and the lender/broker will all be present for the closing, and everything will be reviewed and explained for you as well at this meeting. With COVID, however, this hasn’t been the case. You can expect your realtor to fill you in on the rest of the details and likely handle a few more things than usual virtually. Some states, like Virginia, even allowed for Remote Online Notarization (RON) pre-pandemic, but even more adopted the practice in 2020. 

Once everything is signed, you’ll get the keys to your new home!