YOUR OFFER WAS ACCEPTED. WHAT TO DO NEXT.
You can’t believe it, you put an offer in on the home of your dreams, and the seller accepted. What do you do now? This is a very exciting and hectic time in your life, but with the right assistance it doesn’t have to be. In New York State buyers and seller can represent themselves in a real estate transfer, or they can retain the assistance of an Attorney. While the realtor helped you find the home, fill out the contract, and make the offer, they cannot offer any legal advice.
After the seller has accepted your offer and you have a fully signed contract you may decide to contact an attorney who will then review the contract. Real Estate contracts will always have an attorney approval clause which will provide time for your attorney to review the contract and, if needed, make changes to the contract so that you are protected. The Attorney can even cancel the contract if you changed your mind and no longer want the house, but it can only be done during the attorney approval period. After that you are locked in unless one of the other contingencies contained in the contract is used.
So, the attorney approval time has passed and your purchase is moving forward. The next thing you will encounter is the inspection period. During this time, you will have the house inspected by a licensed home inspector who will look at the structural integrity of the house, check for any mold issues, make sure all the appliances work, and make sure all the equipment in the house works, i.e.; heating and air conditioning systems. If the house is on a private well and septic the inspector should also check these systems to make sure the septic system is working properly and that the well is producing a sufficient number of gallons of water per minute. You will also want to get the home inspected for radon. Once the inspector is done inspecting the home they will provide you with the inspection report which you should provide to your attorney. If any issues arise which cost more than $1500 to correct or repair they can be negotiated between the attorneys. If no resolution is reached the contract can be cancelled if done within the date set in the contract.
While all this is being done, you have already been pre-approved for your mortgage and are just providing the bank with additional information. Once the bank has all the information they need they will then supply you with a commitment letter which sets forth further items they need from you in order to close on the house. If, however, the bank determines that you no longer qualify for a mortgage, you need to immediately notify your attorney and provide them with a copy of the declination letter from the bank. This information will be provided to the seller and the contract can be cancelled if done within the dates set forth in the contract. This is when the mortgage contingency clause of the contract will come into play.
While all this is going on your attorney has ordered title insurance, Title insurance is an insurance policy that insures you have a clean title to the house. The cost of title insurance is regulated by New York State, and costs the same no matter what title insurance company you choose. Normally your attorney will take care of this, however, sometimes banks offer to order title insurance for you, and other times, if the house is a new build, the seller may want you to use their title company as a condition in the purchase contract. It does not matter what title insurance company you use. Every company uses the same documents and public records, and follows the same procedure to make sure the title to your house is clean and that you and the bank are protected. Once title is done a copy of the title report will be mailed to your attorney and to the bank’s attorney. If the title report shows any problem with the title to the home it is up to the seller or the seller’s attorney to clear up this matter before you can buy the house. Do not buy a house with an outstanding lien. Once the bank’s attorney is satisfied that title is clear, and they have all the information and documentation they require, a closing date will be scheduled.
The last thing you need to do is purchase homeowner’s insurance. Make sure you list the bank as an additional insured so in case something happens to the house, the bank will be paid.
Finally, you’re at the closing table, and the house is yours.
Kathryn S. Dell, Esq.