Those Pesky Deadlines…. When Buying a Home
Posted August 14, 2023 in Real Estate Trends
In real estate we have a phrase, “time is of the essence,” and it is an important one. Everything in the process has a time limit, and you need to know what those time limits are since they affect you directly. These time limits start from the moment you have an accepted offer on a home.
Earnest money becomes due within 3 business days of the mutual acceptance.
EM is a ‘good faith’ deposit. If a buyer were to back out, WITH a legal reason, this deposit is refundable to the buyer. If the buyer backs out of the contract WITHOUT a legal reason, this deposit goes to the seller. At closing, this deposit can go toward the buyers closing costs, or down payment or (depending on the buyers loan type), this deposit can be returned to the buyer.
Inspection & Appraisal.
Most deadlines are done by ‘business days’, but the inspection contingency timeline is different. You have 10 calendar days to perform a home inspection, AND any other inspections a buyer might want (such as sewer scope or radon inspections) with a licensed home inspector (or other such as plumbing company for sewer scope), and to provide the seller with a list of any requested home repairs. The 10 days is a boiler plate time frame but can be shortened/lengthened as per the signed around contract. As a buyer, you have options: a) You can accept the home in its current condition with no repairs, b) Decline the inspection (for any, or no, reason) and terminate the contract, c) You can request repairs, or d) You can request 5 additional days for the inspection period if needed upon inspectors suggestion. Again, your response must be provided to the seller’s agent by that 10 day deadline. This deadline starts from mutual acceptance. The sellers have 3 business days to respond from receipt of the inspection repairs request. The sellers response can be a) agree to all repairs, move forward to closing, b) seller rejects all proposals c) seller to do only selected repairs, or d) seller rejects all, but proposes a different option(s). This is a negotiation period. After the home inspection has been done, and mutually agreed upon, the lender begins their deadlines. The appraisal needs ordered and one. Underwriters need to do their job and review your file. Then the title company needs to do their title insurance, docs, and get you in for signing. From home inspection to signing is usually between 2-3 weeks for the average FHA, VA, or Conventional loan.
When your Realtor writes your offer, you should be discussing what day you would like to get keys. Signing is not closing. Closing is the day that the home records at the courthouse are in your name, and you become the official homeowner. When this happens your agent can give you keys (unless the seller has requested some post-closing possession. The sellers are expecting you to close ‘on or before’ the closing date. If you do not close on that particular date, a closing extension will need to be requested. If you do not close on time, and the seller chooses not to sign the extension, you could lose your home, and the money you have already spent for earnest money, inspection fees, and appraisal fees. Another thing a seller could do is grant the extension, but with a daily fee for the time needed to close, or to request that all, or a portion, of the earnest money to be released and made non-refundable to cover their risk. One thing your Realtor should do is make sure they give enough time for the lender to close your home loan. It is always better to close on time, or early rather than asking for more time.