What Is Required Of A Home Seller After Their House Is Under Contract
Selling a house can be an exciting yet complex journey, and one significant milestone in this process is when your house goes under contract. At this stage, your home is no longer just on the market; it's now in the process of being sold so what happens next? In this blog post, we'll explore what's required of the seller when a house goes under contract and how to navigate this critical phase successfully. When a seller accepts an offer on a home, the seller has accepted a legally binding contract and the next steps are very important to getting to the finish line.
Depending on the state the home is in, the earnest money deposit, (if there is any) could be in play if the seller does not perform what is required of them and the deal could fall through. In this post we will learn what happens when a house is under contract, what a contract means and more. Remember under contract does not mean sold and how the contract is written dictates how long can a house be under contract, for example with new construction a house could be under contract for months before settlement.
1. Maintain the Property After The Home Offer Is Accepted
Once your home is under contract, it's crucial to keep the property in the same condition as when the buyer made their offer. This means continuing with regular maintenance and ensuring that the property remains in good shape until the closing.
Maintaining the property is of paramount importance once your house goes under contract. It serves several crucial purposes in ensuring a successful sale. First and foremost, it's about preserving the value of your property. When a buyer makes an offer, they expect the property to be in the condition they saw during their initial visit. Any significant changes or deterioration can lead to dissatisfaction, renegotiations, or even contract termination.
Moreover, most real estate contracts stipulate that the seller must maintain the property in its current condition until closing. Failing to do so can result in a breach of contract and potential legal consequences. Beyond legal obligations, property maintenance is about building and maintaining buyer confidence. A well-maintained property reassures the buyer that they've made the right choice and helps prevent buyer's remorse.
By keeping the property in good condition, you mitigate doubts or second thoughts the buyer might have about their purchase, which can help prevent the deal from falling through. Additionally, proper maintenance minimizes the likelihood of last-minute requests for repairs or price reductions, streamlining the closing process. Ultimately, maintaining your property ensures that inspection results remain relevant, as a well-kept property won't develop new issues that could prompt a second inspection or negotiation.
2. Cooperate With Inspector During The Home Inspection
Buyers typically have the right to conduct inspections on the property, which may include a general home inspection, termite inspection, radon test, and more. As a seller, you should cooperate with these inspections and provide access to the property. Be prepared to address any issues that arise during this phase.
Cooperation with inspections is a crucial step when your house goes under contract. While a home inspection contingency may not be part of the contract typically, buyers have the right to conduct various inspections, including a general home inspection, termite inspection, radon test, and more, to assess the property's condition thoroughly. As a seller, it's essential to be cooperative and accommodating during this phase.
Firstly, provide access to the property for the inspectors. Timely and hassle-free access helps keep the transaction on track. Be prepared for the inspection process to uncover issues or needed repairs. This is a common part of the due diligence process, and buyers often use inspection reports to request repairs or concessions.
Open and clear communication with the buyer's agent is essential during this phase. Address any inspection-related concerns promptly, and work together to find equitable solutions. Depending on the contract and negotiations, you may be responsible for specific repairs or concessions. Collaborative and transparent discussions with the buyer's agent can help facilitate this process.
Cooperating with inspections not only ensures a smoother transaction but also demonstrates your commitment to the deal's success. It builds trust and goodwill between you and the buyer, contributing to a positive overall experience for both parties. By being proactive and responsive throughout the inspection process, you help pave the way for a successful closing.
3. Complete Agreed Repairs While The House Is Under Contract
If the inspection reveals any issues or needed repairs, you may be required to address them. This can involve negotiating with the buyer on which repairs you'll complete or offering concessions in lieu of repairs. It's essential to communicate openly and work collaboratively with the buyer's agent to reach an agreement.
When your house goes under contract, it's common for the buyer's inspection to uncover issues or necessary repairs. Completing these repairs in a timely and satisfactory manner is crucial to ensuring a smooth and satisfactory transaction.
First, after the inspection, you'll typically receive a list of requested repairs from the buyer or their agent. Carefully review this list, and with the help of your real estate agent, decide which repairs you are willing to complete. Some repairs may be essential for safety or structural integrity, while others may be more negotiable.
Once an agreement is reached on which repairs you will complete, it's essential to hire qualified professionals to perform the work. Ensure that the repairs are done to a high standard and in compliance with any applicable building codes. Keep all receipts and records of the work completed, as these may be required during the closing process.
By completing agreed-upon repairs promptly and effectively, you demonstrate your commitment to the transaction and help instill confidence in the buyer. This can lead to a smoother path to closing and reduce the likelihood of last-minute hiccups.
4. Disclose Property Information To Your Real Estate Agent And Buyer
Sellers are typically required to provide a disclosure statement that outlines any known issues with the property. It's crucial to be honest and transparent in this document, as failure to disclose known problems can lead to legal complications.
When your house goes under contract, it's essential to provide full disclosure of property information to the buyer. This is not only an ethical responsibility but also a legal requirement in many jurisdictions. Disclosing property information helps ensure transparency and honesty throughout the transaction. Here's why it's crucial:
Legal Requirement: In many places, sellers are legally obligated to provide a property disclosure statement. This document typically includes information about the property's condition, known defects, past repairs, and any environmental issues. Failing to provide accurate disclosures can lead to legal consequences.
Buyer's Informed Decision: By providing detailed information about your property, you enable the buyer to make an informed decision. This transparency can build trust and confidence between you and the buyer.
Avoiding Future Disputes: Full disclosure can help prevent disputes or legal issues after the sale. If the buyer is aware of existing issues or conditions, they can make decisions accordingly, such as factoring potential repair costs into their offer price.
Building Goodwill: Being forthright with property information, even if it includes minor issues, can create goodwill with the buyer. It shows that you are committed to a fair and transparent transaction.
Enhancing Negotiations: In some cases, known property issues can be negotiated as part of the sale. By disclosing these issues upfront, you set the stage for constructive negotiations and a smoother transaction.
Remember that property disclosures vary by location, so it's essential to work with your real estate agent and/or legal counsel to ensure that you comply with all relevant regulations and provide accurate and complete disclosures.
5. Cooperate If An Appraisal Contingency Is Part Of The Buyers Mortgage
In most real estate transactions, if they are getting a mortgage the buyer's lender will order an appraisal to determine the property's fair market value. As a seller, you should cooperate with the appraiser and provide access to the property to facilitate this process. There may or not be a financing contingency as part of the contract terms so before you sign the contract know what a contingency allows and that it is a binding contract.
Cooperation with the appraisal process is critical, as it directly affects the buyer's ability to secure financing for the home sale. When your house is under contract, the buyer's lender will typically order an appraisal to determine the property's fair market value. Here's how you can ensure a seamless appraisal process:
First, make your property readily accessible to the appraiser. Ensure that all areas of the property are available for inspection, and provide any necessary documentation about recent renovations or upgrades that could positively impact the home appraisal.
It's important to remember that the appraiser's role is to provide an independent and unbiased assessment of the property's value. While you may have an idea of what your home is worth, the appraiser's opinion carries significant weight in the lending process.
In the event that the house does not appraise, appraisal comes in lower than the agreed-upon sale price, it can lead to renegotiations between you and the buyer. Be prepared for such scenarios and work with your real estate agent to find a mutually satisfactory resolution, whether that involves adjusting the price, making concessions, or other negotiated solutions.
6. Respond To Any Title & Escrow Concerns
The title and escrow process involves ensuring that the property's title is clear of any liens or legal issues. Sellers often work with a title company or attorney to address these matters and provide necessary documentation.
The title and escrow process is a critical component of the closing phase when selling a house. Here's what you need to know:
Title Search: During this phase, a title company or attorney will conduct a title search to ensure that the property's title is clear of any liens, encumbrances, or legal issues. Any title issues must be addressed and resolved before the closing can proceed.
Escrow Account: In many real estate transactions, an escrow account is used to hold funds and documents until all conditions of the sale are met. The escrow officer plays a crucial role in facilitating the transaction, ensuring that all parties meet their obligations.
Closing Documents: As the seller, you will need to sign various closing documents, including the deed, which transfers ownership of the property to the buyer. The closing documents may also include a settlement statement detailing the financial aspects of the transaction.
Closing Costs: Sellers often have specific closing costs, which may include agent commissions, title insurance fees, and other expenses. It's essential to understand these costs and be prepared to pay them at closing.
Cooperation: Cooperation with the title and escrow process is essential. Respond promptly to any requests for documentation or information and work closely with the professionals involved to ensure a smooth closing.
7. Coordinate The Closing Or Settlement With Your Real Estate Team
Closing day is the culmination of the selling process. Sellers are required to sign various documents, including the deed, to transfer ownership to the buyer. It's essential to be prepared for this day, have all necessary documents in order, and understand the financial aspects of the closing, such as any closing costs you may be responsible for.
Being prepared for the closing day is essential to ensure a smooth transition of ownership. This is the culmination of the entire home-selling process, where all parties involved gather to finalize the transaction. As the seller, here's what you should anticipate:
Firstly, you'll be required to sign various legal documents, including the deed, which officially transfers ownership of the property to the buyer. These documents will typically be prepared by the title company or attorney overseeing the closing. It's crucial to review these documents carefully, understanding the terms and implications of each. If you have any questions or concerns, don't hesitate to seek clarification.
Financial aspects are also central to the closing. You should be aware of any closing costs you're responsible for, such as agent commissions, title insurance fees, or other agreed-upon expenses. Being financially prepared for these costs ensures that there are no last-minute surprises.
Additionally, ensure that you have all necessary keys, garage door openers, and access devices ready to hand over to the buyer. The property should be vacated and in "broom-clean" condition as agreed upon in the contract.
8. Vacate the Property In Broom-Clean Condition...Or Better
Before closing, sellers are expected to vacate the property and leave it in "broom-clean" condition, which means it should be tidy and free of personal belongings. Ensure that all keys, garage door openers, and other access devices are provided to the buyer.
Before the closing day, it's essential to vacate the property and leave it in the condition agreed upon in the contract, typically described as "broom-clean." Here's why this step is crucial:
Vacating the property ensures that the buyer can take possession as agreed upon in the contract. It's a physical representation that you are transferring ownership to them.
"Broom-clean" condition means that the property should be tidy, free of personal belongings, and in the same state as when the buyer initially viewed it. This condition allows the buyer to move in without any unexpected issues or surprises.
Leaving the property in good order is not only a contractual obligation but also a gesture of goodwill. It demonstrates your commitment to a smooth transition and a positive experience for the buyer.
Before vacating, perform a final walkthrough to ensure that nothing is left behind, and the property meets the agreed-upon condition. Make sure all utilities are transferred out of your name and that the buyer can easily access the property after closing.
Going under contract is a significant step in the home selling process, and sellers have specific responsibilities during this phase. By cooperating with inspections, completing agreed-upon repairs, and maintaining open communication with the buyer and their agent, sellers can help ensure a smooth transaction. It's also essential to work closely with a real estate agent or attorney who can guide you through the complexities of the closing process, ultimately leading to a successful sale of your home.
This post was written by David O'Doherty, a licensed real estate agent since 2007 helping buyers and sellers in Clayton, NC and the Greater Triangle Area of North Carolina. He is committed to providing his clients with exceptional service and personalized attention throughout every step of the real estate process. If you're looking to buy or sell a property in Clayton, NC, or the surrounding areas or have any questions about the local real estate market, don't hesitate to contact David O'Doherty today. Call or Text (919) 601-2268 or email [email protected]