Selling your Home - After the Offer
This blog post is the sixth in a series on 'Selling your home'. The series will explain, step by step, important considerations and events that will occur if you plan to sell your home in the near future. The first five steps in the series, 'Preparation', 'Marketing', 'Pricing Strategies', 'On the Market', and 'An offer. What happens now', can be found on our blog.
In the last few blog posts we've talked about all of the steps involved in getting a home onto the market, from preparation, to marketing, to pricing strategies, to what happens when the home comes on the market, and accepting an offer on your home. All of these steps lead to one desired goal. Selling your home. This blog focuses on the activities that occur after the offer has been accepted, until just prior to closing. Closing activities will be covered in the next blog.
If the offer contains an inspection contingency then the next step after the offer is for the inspection to occur. If there is no inspection contingency, then this step is skipped and you proceed directly to Purchase and Sale. As a seller, you want to ensure that the inspection occurs as quickly as possible, so if this means working in with the inspectors schedule to make it happen quickly then this is recommended. During the peak season of real estate activity, good inspectors schedules get filled up very quickly and it is often difficult for a buyer to get an appointment within the time frame that has been written into the offer. Most 'strong' offers will have an inspection contingency within 7-10 days of the offer - as a seller, you do not want the inspection contingency any longer than this, so you often need to work with the buyer to get their inspector in as soon as possible. If the inspection is delayed, then this delays the decision point for the buyer to exit the contract based on the inspection. If your home has to come back on the market as a result of the buyer exiting the contract based on the inspection, you want this to happen sooner rather than later. The 'excitement' that occurred with the buyers when your home first came on the market dissipates over time, and the longer it is 'off the market' negatively impacts the 'excitement' level when it comes back on the market.
The buyer has the following potential responses with respect to the inspection:
- They can move forward with the home in the condition it is in.
- They can exit the contract and get their $1000 deposit back.
- They can request a credit from the seller to take care of something found during the inspection,
- They can request the seller fix something that was found to be an issue.
Note that it can be a combination of 3) and 4), and it becomes another negotiation during this phase as to what the seller and buyer agree to as a result of the inspection.
This is different with new construction. An inspection on new construction is generally just prior to completion and often coincides with the creation of a punch list for the builder. Town building departments require regular visits to the construction site during all phases of the completion of the home and the builder has to obtain sign-offs at each step, so the home buyer can be assured that construction is being completed as per town building codes.
Purchase and Sale
Once the inspection negotiations have been completed, the next step in the sale process is executing the Purchase and Sale. Its always recommended that both the buyers and sellers have a real estate attorney represent them in the transaction. The Purchase and Sale is a standard document used for each real estate transaction, but with specific information related to this transaction included. The buyer and seller attorney also include riders which are incorporated into the P&S, that are negotiated by the attorney's, that additionally protect their clients. At the signing of the P&S, the buyers pay the balance of the deposit that is due. The amount of deposit due is generally 5% of the purchase price, minus the amount paid at the time they made their offer. This can be different dependent on specific circumstances. After the P&S has been signed, the buyer continues on with applying for a mortgage.
Prior to closing
Prior to closing there are several steps that need to be performed by the seller subsequent to a successful closing. If there were any inspection items that needed addressing then these need to be performed, and receipts verifying that the work has been done need to be sent to the sellers attorney, or agent, so that these can be provided to the buyers.
The listing agent will arrange for a smoke and carbon monoxide inspection to be done by the local Fire Department. The Fire Department will issue a certificate certifying that the home has the correct number of both types of detectors and they are positioned in the home correctly, and are in working order. This certificate is valid for 60 days from the date of issuance and needs to be supplied to the closing attorney.
If you're selling a condominium, then a 6D certificate needs to be supplied to the closing attorney by the condo association. The 6D certificate states what condo fees, special assessments and fees payable are still due and payable by the seller. If there are fees outstanding, then these are taken care of, and paid on the sellers behalf, by the closing attorney.
If you're selling a home with a septic system, then a Title V certificate is required that gives the septic system a 'clean bill of health'. A home cannot be transferred to another party unless there is a Title V certificate stating that the septic system is all clear.
Prior to closing, your agent will arrange to get final water readings for your home and the closing attorney needs to see that the final water bill has been paid, as water charges 'follow' the home. Some towns have their own electricity departments, and in these cases, the final electricity bill is handled the same way. If these bills are not obtained prior to closing, then the closing attorney will 'hold back' funds from the seller so that these can be paid after closing, and the balance of the 'hold back' funds paid out to the seller. It is much more straightforward to have these bills paid prior to closing, and the paid receipts provided to the closing attorney.
If you have any questions about any of this then please don't hesitate to reach out to one of us. We would be more than happy to help.