You just made an offer on the house of your dreams and the seller accepted. There is a moment of wonder and excitement, followed by a moment of trepidation and questions.
Do I own a house now? What happens next? Is this the final step? Can something go wrong and change the outcome of me owning this house?
All of these questions are valid, and we are here to help you answer them. Continue reading to understand the exciting process of being under contract and what it means for you.
What Does Being Under Contract Mean?
Once a house is under contract, that means the buyer made an offer on the house, and the seller accepted that offer, but the sale is not final. The transaction needs to be complete for the status of the house to change to Sold.
What is Required to Complete the Transaction?
Once your offer is accepted, both you as the buyer and the seller need to get through the contingencies. You have to secure your financing, the house has to pass inspection, and the property has to be free of defects. Other contingencies may exist, based on what is in the contract. Most real estate contracts have a list of contingencies that both the buyer and seller have to complete. If either you or the seller fails to meet those conditions, the contract becomes void, and either of you has the right to back out of the sale.
What Are Some Standard Home Buying Contingencies?
If you obtain a loan for a home, your lender will pay to have the house appraised to make sure the house is worth the amount you are borrowing. However, if the home is assessed lower than your offer, you have the opportunity to offer the price of the appraisal to the seller. Should the seller refuse, the contract can be forfeited.
If the buyer has a pre-approval letter, but investigations into the property show deficiencies, the loan can still be denied.
As a buyer, you have the right to get a complete home inspection on the house you are purchasing. If you give the seller a Request for Repair, you need to provide them with a copy of the inspection. The inspection is usually one of the first items checked off the list in the home buying process.
A lot of houses built before 1978 contain lead-based paint. As a buyer, you have ten days to inspect for lead-based paint.
Your contract should explicitly state who pays for the pest inspection and whether or not the inspection includes any outbuildings or garages. If the inspector finds pests or dry rot, an additional expense could need to be a part of negotiations.
A lot of home inspectors won’t walk on the roof of a house to avoid damaging it during their inspection. As a buyer, you can hire a roofing company to do the roof inspection, but you shouldn’t hire the same company who inspected to make repairs, as they can profit from that.
A sewer inspection involves inserting a camera into the sewer line to check for clogs caused by tree roots or cracked piping. This inspection is worth the extra cost because having to fix it later is an expensive procedure.
Radon, Mold, or Asbestos Inspection
If a home inspector suspects radon gas, mold, or asbestos, they will call for additional inspections. Removal of these defects are usually expensive, so it’s best to catch them ahead of time and put the cost of removal into the final bid offer.
Private Well Inspection
If the home you wish to purchase has a private well, you have the right to inspect the water’s potency and compare it to health standards. An inspection can tell you how fast the water comes to the surface and, if the well does not pass the inspection, you can ask the seller to fix the situation.
Preliminary Title Report
A title investigation will show you any monetary liens, easements or CC&Rs that may be on the house you are trying to buy. If an easement happens to be right where you want to build a fence or put in a hot tub, you have grounds for a cancellation of your contract. CC&R stands for Covenants, Conditions & Restrictions, and are similar to HOA regulations and rules placed on a house such as smoking, paint color, yard art, etc. You will usually get a list of these restrictions after you are under contract.
What if I Found My Dream House and It’s Already Under Contract?
If a property you are interested is under contract, that doesn’t mean you’re out of luck. If either the buyer or seller cannot meet any one of the contingencies, the house may go back on the market. Until the home has a SOLD sticker out front, you are free to lurk online or do the periodic drive by to see if the PENDING sticker has come down.
How Long Does It Take for a Sale to be Final?
Once a house is under contract, the buyer has a specific amount of time to come through on their requirements. The house remains under contract during this time, but can still be on the market just in case something falls through, or someone cancels the transaction.
Can I Put an Offer on a House that is Already Under Contract?
You can place a backup offer just in case the house goes back on the market. If you choose to go that route, you may need to make a generous offer to make sure your offer is accepted. Contracts fall through for various reasons, so there’s always a chance of you getting the house you wanted the first time around.
I Want My Dream House, How Do I Get It?
Now that you know what happens under contract, sign up at Homes for Heroes to meet with your affiliate real estate specialist to start looking for your forever home.