A TYPICAL SALE TRANSACTION PROCESS.
It’s important to understand the typical sale process from listing to closing. This will help in identifying areas of greater concern as well as set certain expectations. Typically, here is how a transaction usually goes (this is based for New York, so certain differences might exist if you are in another location but the information will be similar).
1-List the Property – You or a Real Estate professional publicly list the property For Sale ( ideally on a Multiple Listing Service for maximum exposure) at a realistic price for your current market.
2- Show the property/Review offers-You or your Real Estate professional schedule showings and open houses of the property to qualified buyers and hopefully start to review offers (Ideally within the first 30 days) *This typically is the FIRST point of price and terms negotiation.
3-Accept an offer-After you have settled on a satisfactory price and terms of sale, it is customary for your (the seller’s) real estate attorney to draft an UNSIGNED sales contract and send it to the buyer’s real estate attorney.
4-Home Inspection - Before the buyer signs the contract and leaves a “good faith deposit” the buyer will most certainly perform a home inspection. This is not a pass or fail situation but will identify any issues or deficiencies the property may have, for example: a leaking roof or outdated electrical system.(This usually happens shortly after an accepted offer and also can happen before initial contracts are drafted). This can be the SECOND point of price or terms negotiation. For example: The buyer is requesting either a reduction in price or a concession in the amount of money it would cost to repair a leaking roof.
5-Contract Signing-Assuming all is well, and both sides have come to an agreement (if necessary) after the inspection. The buyer will sign a contract, leave a “good faith deposit” and have their attorney send both to the seller’s attorney for the seller’s counter signature. After the seller signs, you are in full contract and if the buyer is using a loan to buy your house, their loan process will then begin (ideally this will happen 1-2 weeks after an accepted offer).*If the offer is all CASH then the buyer will not be needing a loan.
6-Property Appraisal-The buyer’s lender obtains a copy of the contract and will order an appraisal (typically this is done within 2 weeks after a fully executed contract signed by both buyer and seller).Hopefully, there is no short coming between the agreed upon contract price and the bank appraisal value. If so, this can be the THIRD point of price or terms negotiation. For example: The contract price was $600,000 but the appraisal came in at $590,000. This $10,000 difference has to either be reduced from the selling price, paid out of pocket by the buyer or a combination there of.
7-Title Report-At this point after the appraised value matches or exceeds the contract price (and the buyer receives his or her bank loan commitment letter shortly thereafter), a Title report is typically ordered by the buyer’s attorney. Think of a Title report like a personal credit report but for a property. It basically lists (among other things) all the current owners, the type of property and it’s allowable use, the current mortgages, liens, violations (if they are any) etc. This is critical in establishing a “clear” or transferable title and the buyer being able to obtain title insurance which is a requirement by their lender. In theory, this could be the FOURTH point for price or terms *negotiation. For example: if there are building violations that have unpaid fines, the buyer and or the Title company may require those funds be held in escrow at closing until the violation is paid or otherwise resolved.
8-Land Survey- Around the same time as the Title report, the buyer’s attorney will also order what’s called a land survey, this basically just maps out the property’s land and lot boundaries.
9- Clear to Close- Assuming a “clear” title is obtained. The buyer’s lender at this point will be working on what’s called a “clear to close". Basically, it’s the bank going over all the details from the buyer and the property and giving the final approval for funding.
10-Closing-The attorneys, buyers, sellers and Title company schedule a date to close that works for all parties and hopefully a successful transaction occurs!
Ideally, this whole process with no unexpected issues should take anywhere from 3-6 months with a buyer using loan and 30-45 days for a buyer with all cash.
Any other questions please feel free to contact me anytime
Licensed Real Estate Salesperson
917-238-9119
Comments