The staging is done, the pictures are taken, your home is on the market, and you finally get that first offer. It is truly an exciting moment for any seller when your hopes of selling your home become a reality, but the work is not yet done. How should you proceed? How do you get under contract? What happens now? You need a professional to help guide you through navigating this timeframe of getting under contract and all the way to closing. But never fear, we are here to help! Let's talk through what to expect when your home is under contract.
When listing your home, your agent should be able to give you a reasonable time frame for how long you can expect your home to be on the market before getting under contract. Now, this isn’t an exact time frame of course, but rather a best estimate based on what they are seeing in the current market with homes comparable to yours and in your geographic area.
Your agent will also be communicating with other agents who have interested buyers about what other parts of the offer (other than the sales price) are important to you - factors like the timeline for closing, the option for a lease back, or removing any contingencies from the offer. We want to make sure that we are maximizing your bottom line and also removing as many potential contingencies as possible that the buyer may have.
Getting Under Contract
In a seller’s market, a market in which there is more demand for homes than there are homes available to buy, you may find yourself with multiple offers on your home. In situations where you’re entertaining multiple offers, we really want to find the balance between waiting to see what offers will come in and being courteous to the offers that are received. It’s no small thing that someone is offering to buy your home, but we also want to allow enough time to get people through your house to see it and get competitive offers. More often than not, when multiple offers are coming in, your agent will set a deadline for all offers so that you as the seller can respond appropriately to the offers that are received.
Whether you have one offer or multiple, your agent is going to do their due diligence on any and all offers. We will first talk to the buyer’s lender and ensure that the buyer is qualified, that the timelines and deadlines set by the contract are ones that this lender is able to adhere to, and what the options are if the appraisal comes in low.
Your agent will look over the contract with a fine-tooth comb to make sure that it is properly completed and also recommend to you points that might be negotiated on your behalf. Most of the negotiating that your agent will do after the initial offer is received will be verbal, but, once a final agreement has been reached, both parties will sign a contract that reflects those final terms. Once you’ve both signed, you’re officially under contract!
The Option Period
A typical timeframe from getting under contract to closing is about 30 days. Once you are under contract, you move into the option period. This period is a negotiated time (agreed upon in the contract) but is typically about five to seven days. The most important thing to know during the option period is that this is the time in which a buyer can terminate the contract for any reason and only forfeit the option fee.
During this time, there are a few things that need to be done in which people will need to be in your home. During the option period, the buyers will schedule an inspection of your home. This is often the most nail-biting time for the seller as they wait and see if there are any major findings that come out during the inspection that might lead the buyer to terminate the contract.
The inspection will occur usually within one to three days of getting under contract and lasts on average about four hours. During the inspection, you and any pets will need to be out of the home so that the inspector can do all that they need to. You will also want to ensure that your crawl space, electrical panel, and attic are all accessible so that they do not have to come back another time in order to finish the inspection.
At the end of the inspection, the buyer usually comes out to the house and debriefs the findings of the inspection. You are not permitted to listen in on this conversation nor will you be given this inspection report afterward. The inspector is hired by the buyer and the report is for them. However, the buyer’s agent will usually notify your agent of any items they are particularly concerned about or would like the seller to address. If there are any items that they would like to have more information on, the buyer may opt to hire additional professionals to come to your home and investigate something further such as plumbing or the foundation.
All of these things happen very quickly so that the buyer can get as much information as they need before the option period ends. Depending on the findings, the buyer will most likely request either a repair that you as the seller will need to complete before closing or a credit for repair so they can do it themselves after closing. All of these things will be negotiated with the help of your agent. It is normal and expected for the buyer to make some request and your agent will help guide you through these negotiations to ensure that what we’re agreeing to is necessary to get you to the closing table.
The Appraisal
Another important milestone while under contract is the appraisal of your home. During the appraisal, your agent will coordinate a time with you to have an appraiser come out to your home. The appraisal generally takes about 30 minutes during which they will take measurements and some photos of your home. The appraisal report typically takes about two weeks to be completed and like the inspection report, the seller usually does not see the appraisal report.
If the appraisal comes in below the contracted sales price, we will reach out to the lender to see if there are options to restructure the loan. If that is not an option, then we will potentially need to renegotiate with the buyer. However, if the appraisal meets value, then we celebrate and move forward to closing.
As a seller, the remainder of the contract period is focused on making any necessary home repairs negotiated in the contract and packing up in preparation for closing day! Next, in the “What to Expect” series we will be walking through closing week. What to expect and how to keep the buyers as happy as possible until we get to the closing table.
Selling your home is an exciting time and it can also be a lot of work. But we are here to help you know what to expect and navigate even the unexpected. Thinking about buying or selling a home? Give us a call. We’re here to help you every step of the way when it comes to buying and selling your home.