If you and the seller agree to the terms of the contract, then the offer is officially accepted and you’re on the way to purchasing your new home! But before you get to closing, you’ve got a few more things to do.
If your offer wasn’t accepted, it can be a frustrating and disappointing result. But don’t give up—homes come on the market every day. Keep house hunting and your dream home could be right around the corner!
If you were pre-approved, you need to contact your lender to let them know you have a contract in place. They will update your application and finalize the loan process. If you did not get pre-approved (and the seller accepted the offer), you will need to submit your mortgage application as soon as possible.
When you’re working with a lender to finance the home, the lender will typically order an appraisal on the property. The lender should have a licensed real estate appraiser evaluate the property and complete a Uniform Residential Appraisal Report, Form 1004. This report shows the calculation of the fair market value of the home by comparing the property to recently sold homes in the neighborhood. The report should also show the market value based on a “cost approach to value”—calculating the value based on the value of the land plus what it would cost to build a house of similar size and quality. In addition, the report should list detailed information about the property and the neighborhood.
You typically will need to pay what’s called “earnest money” which shows the seller you are serious about buying the home. Think of earnest money as a deposit you are providing the seller (usually around $500 - $1,000 or a certain percentage of the offer price) that will be applied to the purchase once the contract is finalized.
Another important step is the inspection process. Most buyers should request a home inspection before closing and this is typically a condition written into the sales contract. This allows you to uncover any potential issues with the home—structural, plumbing, electrical—that may not be visible when you visited the property.
Usually there is an inspection period that’s defined in the contract, and you must have the inspection completed within that time frame. If some issues are uncovered during this time, you can walk away from the property—even with the contract in place—without penalty (other than potentially forfeiting the earnest money).
Some homes are sold "as-is" which means you agree to accept the home in its current condition. You can still get an inspection, but the seller will not pay for any repairs that may be needed.