Frequently Asked Questions
The Closing Process
Congratulations! Your home is now under contract. The first step in most transactions is for the buyer to complete an inspection. Your agent or the closing team can tell you whether or not the buyers have chosen to have an inspection, and when the buyer’s inspection is scheduled. If the home is vacant, be sure that all of the utilities are still on at the home. The inspector will not be able to complete a thorough inspection if water, gas, and electricity are not on during the time of the inspection. This can cause delays in the inspection period and even the closing date. If utilities are not on at the home, notify your agent or the closing team immediately. Back to Top
Be sure your home is tidy. Your home does not need to be “staged” by any means once the home goes under contract, but it will need to remain tidy in order for the inspector and appraiser to move throughout the home with ease. Be sure the accesses to crawlspaces, attics, storage areas, etc. are clear and free from any clutter. If your accesses are sealed (glued or screwed) shut, please unseal them. Most inspectors will not cut open or unscrew the attic accesses while they are there. It will be up to you to make sure these are available to them to avoid any delays in the inspection period. Back to Top
The inspector will take detailed notes of the home. He or she checks to make sure everything is functioning as it should. This includes exterior defects such as missing siding or cracks in stucco, as well as interior malfunctions such as leaking sinks and improper ventilation. As a seller, you must remember that the inspector has an obligation to the buyer to find anything and everything “wrong” with the home. However, no buyer expects a home to be perfect, nor will they be surprised when items do come up on the inspection. The main problem we run into with the inspections are major defects such as roofs needing repair, foundation separating or drifting, and other severe structural issues. Even with events such as these, some buyers are willing to move forward with the transaction. Back to Top
Can I, the seller, be present during the inspection?
We highly recommend that you are absent during the time that the inspection is taking place. When sellers are present, it can increase inspection time and hinder inspection results. The inspection is best left to the inspector, the buyer’s agent, and the buyer. We understand that some sellers may have special circumstances that require them to be home during this allotted time period. If you have any concerns about leaving your home during this time, contact your agent, who will be able to instruct you on how to best handle this situation. Back to Top
How long will the inspection take?
The length of the inspection depends on the inspector and the size of the home. Larger homes take longer to inspect than smaller homes. For sellers, we typically recommend leaving the home for 2-3 hours while the inspection takes place; however, depending on the inspector, your agent may be able to give you a more defined amount of time. Back to Top
What is the next step after the inspection happens?
After the inspection, the inspector will write a summary of all inspection items found in the home. This will take 24-48 hours to get back to the buyers and their agent. The buyers and their agent will then discuss the items on the inspection report they received from the inspector. At this point the buyers have 3 options - 1) Accept the home in its current condition, 2) Ask the seller to repair some or all of the items on the report, or 3) Ask the seller for a credit in lieu of repairs. Once the buyers decide what they are going to request, an Inspection Contingency Notice will be written up and submitted to the listing agent. If the property is being accepted “as-is”, the inspection contingency is complete and the transaction moves forward. If the buyer is asking for repairs or a credit, the seller will have a certain number of days to respond (see Purchase and Sale Agreement line 168 - usually 3 business days). If the seller responds within the allotted time frame and agrees to the buyer’s request, the inspection contingency is cleared, and the transaction moves forward. If the sellers do not respond within the allotted time frame or they do not agree to all of the requested items or the requested credit, the buyer has a certain number of days (see Purchase and Sale Agreement line 176 - usually 3 business days) to decide if they will proceed with the transaction, or terminate the transaction and receive their earnest money back. If they elect to proceed, the inspection contingency is cleared and the transaction moves forward. In the event that the buyer does not respond within the allotted time from, the contract states that they are deemed to have chosen to proceed with the transaction, knowing that the seller will not complete the requested items. At this point the inspection process is over. Back to Top
Do we have to fix everything on the inspection report?
We generally recommend that you repair as many of the items on the inspection contingency as possible to prevent the buyers from terminating the contract. If you feel that any of the items are too nitpicky or unnecessary, then we can definitely push back on those particular items. Back to Top
Whether you are tight on funds, or the buyer's requests seem impossible, you may find yourself sweating over the Inspection Contingency Notice. If the buyers are requesting too many items that you feel you cannot complete, you can discuss this directly with your agent. You are not obligated to make any repairs; however, if the Inspection Contingency Notice is not agreed upon, the buyer does have the option to terminate the Purchase and Sale Agreement. Back to Top
How long do I have to make any repairs that are requested on the Inspection Contingency Notice?
Any repairs you agree to make must be completed within the allotted time frame on the Inspection Contingency Notice (default is 10 business days). This means, once both buyer and seller have agreed upon what repairs to make, you will have 10 business days (unless otherwise specified) to complete all of the repairs that you agreed to. We recommend keeping all invoices and receipts as proof that all items have been completed. Back to Top
What is an appraisal?
An appraisal is an inspection that is required by all mortgage lenders. This inspection is separate from the buyer's voluntary inspection that is done during the beginning phases of the pending period. The appraisal is done by a licensed appraiser, who is a neutral third party, neither advocating for or against the buyer or seller. The appraiser will compare the purchase prices of homes that have recently sold in the area, and compare them to the purchase price of your home. In order to move past the appraisal period, the appraised price of your property must meet or exceed the agreed upon purchase price. During the appraisal for an FHA or VA loan, the appraiser is also looking for major hazards, such as peeling paint, missing handrails, broken windows, exposed electrical wires, etc. If any of these items are found in the home or on the property, the buyer or seller will need to remedy them before the bank will loan on the property. Back to Top
What if my home doesn't appraise at value?
Unfortunately, sometimes your home does not appraise for the purchase price that has been agreed upon between buyer and seller. If this is the case, there are a few options for you as a seller. If you and your agent agree that the purchase price is fair, you may have your agent pull valid comparable properties that have recently sold to send to the lender. These comparable properties must meet certain requirements, and even these may not convince the appraiser that the purchase price is sound. If you have pulled valid comparable properties, and the appraisal report value does not change, you may consider lowering the purchase price to meet the report value. The buyer, if able, may also make up the difference between the purchase price and appraisal price, though not many buyers have the ability to do this, nor do they wish to purchase a property that has now been deemed "overpriced" by an appraiser. Your agent can best direct you on how to handle this situation. Back to Top
When does the appraisal take place, and what happens during that process?
The appraisal typically takes place after the inspection contingency is met. The appraiser will be contacting you, the seller, or the listing agent to arrange a time that works best for your schedule. The appraisal typically takes about 40 minutes to an hour. Only the appraiser will be at this appointment. Unlike the inspection, you are welcome to be home during this time. This process is also less extensive that the buyer's initial home inspection, as the appraiser is only looking for certain requirements that the home must meet. Once the appraiser completes his visit, it will take him a few days to get the report back to the lender. The lender will submit the report to the processor, who will make sure the appraised value is equal to or greater than the purchase price agreed upon and that no repairs are required. Depending on the type of financing the buyer is obtaining, there may be certain repairs that may be required in order for the appraisal to be cleared. Typical repairs we see on appraisals are broken windows, peeling paint, exposed wiring, and missing handrails. If there are required repairs, the appraiser will have to go back out to inspect them prior to the bank being able to move forward. Once the bank receives an acceptable appraisal, the loan will be submitted to underwriting, where final approval will take place. Back to Top
Unfortunately, as a seller, most buyer's lenders will not release the value that the home appraised for if it meets or exceeds value. Sellers will usually only know if the appraisal meets or exceeds purchase price. They will also be informed if there are any repairs that are called out on the appraisal. If a home does not appraise at value, the seller has the option to lower the price to the appraised value, which will be released to them during this time. Back to Top
After the appraisal, the lender will need to finalize all of the buyers' documents. The appraisal is the last major step in the lending process, so the closing date can usually happen fairly quickly after the appraisal has been approved. The time in between the appraisal approval and the closing date is best spent ensuring that all inspection items have been complete, utilities transfers have been scheduled, packing your belongings, and cleaning the home. Back to Top
We highly recommend having all of your items removed from the home, inspection items fixed, and flooring and surfaces clean no later than 5:00 PM the day before closing. The buyers expect the home to be in "move-in ready" condition when they complete the final walk through, which is usually the evening before closing. Some buyers will choose to complete their final walk through a few days before closing. If this is the case, make the home as "move-in-ready" as possible. Back to Top
During the final walk through, the buyers are ensuring that the home is in relatively the same condition as when they first placed the offer. They are checking to make sure there aren't any new stains in the flooring, chipped finishes, damage due to moving large furniture, etc. This is also the time that many buyers will check to make sure the inspection items were addressed as necessary. This is not a time for the buyers to negotiate new terms, and this walk through does not give the buyer the right to back out of the contract like the inspection period does. This is simply a quick check of the home so the buyer knows that all items in the contract have been addressed before they take ownership. Back to Top
Any spare keys, garage door openers, codes, and manuals can be left on the kitchen counter for the new owners. You can also bring these items to the title company if you are signing your paperwork before the buyers sign theirs. When the buyers sign, the title company can then transfer the keys to the new owners. If you are a seller that lives out of state, you can mail these items to your agent's office and they will handle the exchange. Back to Top
How do I sign paperwork when I don't live in the area?
Our out-of-town sellers have a few different options for signing closing documents. The most popular choice among our clients is to have the title company email the documents to them. From there, you will need to print these documents, and sign them in the presence of a notary. When the title company emails these documents, they also include an overnight label. You will use this label to ship the documents back to the title company. They must have the original documents in order to record the title. You cannot scan or email the documents back to the title company. This means the documents must be signed and mailed at least one day before the contract closing date. Another option for out-of-town sellers is to sign paperwork at a title company near them. If the title company you sign at is not the same title company that works up the documents, the signing title company will often charge a courtesy closing fee. This can range anywhere from $100 to $300 depending on how many documents are included in the closing package. One more option is to travel to the title company that works up the documents and sign there. Some clients that live 1-2 hours away find this to be a more convenient and less expensive option than the other two. Back to Top
During the signing process, the title company will give you 3 options on how to retrieve your funds. The first option is to have them write you a check. The second is to have the funds direct deposited into the account of your choice. The third is to have the funds wired to an account of your choice. If you choose to have the title company write you a check, you can pick up the check after the transaction funds and records during the title company's business hours. If you leave an account number and routing number with the title company, they can direct deposit the funds into your account once the transaction funds and records. You can also leave wiring instructions with the title company; however, most banks do charge a wiring fee, which will be taken from the sale proceeds. Back to Top
Should I make my mortgage payment if my home is scheduled to close?
Yes. Most mortgage companies’ payments are due on the 1st, and late on the 15th. If you are closing after the 15th, then the answer is always yes, to avoid late fees or any negative impact on your credit score. If you are closing before the 1st, then our philosophy is “better safe than sorry”. The title company will order payoff from your lender and use that figure when processing the closing statements. If you have paid your payment prior to the title company ordering payoff, then the amount the bank will give to the title company will be fairly close to the actual payoff. If you made the payment after they ordered the payoff, then the amount they receive from the title company at closing will be in excess of the payoff and the mortgage company will send any excess back to you. It is not money lost! The major problems come when you have a closing right on or near the 15th. If you haven’t made your payment because you were planning on closing before the late payment date, you will end up owing a late penalty fee if the closing is delayed for any reason. The safest answer is to always make your payment on the 1st to avoid any risk of late fees or damage to your credit. Back to Top