Summary
Highlights
Before writing a purchase agreement, agents must ensure the buyer and seller sign an agency relationship agreement. It's crucial to explain that there will be two rounds of negotiations: one for pricing and terms, and another for repairs, which can often be more challenging. Buyers and sellers should also understand contingencies within the contract, allowing buyers to exit under certain conditions like inspections, disclosures, or loan approval. Buyer's agents prepare and submit offers, while listing agents review offers with sellers, contact lenders for pre-approvals, and help the seller choose the strongest offer. This process continues with counteroffers until both parties agree.
Once the purchase agreement is fully signed and initialed, it becomes an executed contract. The date of the final signature is the acceptance date, marking day one of the closing timeline and determining contingency removal dates. The listing agent is responsible for forwarding the contract to escrow, opening escrow, and ordering a preliminary title report. The buyer's agent must send the executed contract to the buyer's lender. Within the first three days, the buyer's agent ensures the earnest money is deposited into escrow. By day seven, the listing agent provides seller disclosures and orders a termite inspection if requested. The buyer's agent orders physical inspections promptly and conducts an agent visual inspection.
Between day 7 and 14, the buyer's agent reviews seller disclosures, escrow instructions, and the title report, clarifying any issues for the buyer. They also review the termite and inspection reports with the buyer. A 'request for repair' is then drafted, addressing any repairs or credits the buyer seeks from the seller based on inspection findings. The listing agent negotiates these requests with the seller. It's recommended that the buyer's agent waits until repair negotiations are settled before the lender orders the appraisal, to save the buyer money if the deal falls through.
Once inspections are complete and repairs negotiated (around day 17), the listing agent should have the buyer's agent remove all contingencies except for the loan and appraisal. If representing the seller and concerned about appraisal value, meeting the appraiser to discuss comparable sales and property improvements can be beneficial. Once the appraisal is sufficient and underwriting approves the loan, usually around day 21, the listing agent should ensure the buyer's agent removes all remaining contingencies.
Between days 21 and 25, if the property has a septic system, the listing agent should order pumping and inspection only after all contingencies are removed to protect the seller. If representing the buyer, it's time to have the buyer transfer all utilities into their name. Loan documents are typically signed between days 25 and 27. The buyer's agent conducts a final walkthrough a few days before closing, usually between days 26 and 28. The lender funds the loan during this time, and official closing occurs when the title company records documents at the county recorder's office.
After the transaction officially closes and recording has occurred, the buyer's agent meets the buyer at the property to exchange keys. It is crucial never to give keys to a buyer before recording is confirmed, as this can lead to significant problems. Finally, it's time to celebrate a successful transaction.