Yay! Offer accepted
Below is a list of immediate steps that a buyer usually goes through once their offer is accepted. As a reference, I answer the question, “How to Make an Offer in Austin’s Hot Market,”, in the FAQ section of this website.
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TURN IN YOUR OPTION AND EARNEST MONEY CHECKS
within 48 hours after effective contract date. Option money goes to listing agent and earnest money goes to the title company.
SCHEDULE THE INSPECTION
within your option period, so that you have time to negotiate with the seller. This also gives you time to terminate the contract if you don’t like what the inspector finds.
REVIEW INSPECTION REPORT
and start the negotiations with the seller if needed. The repairs don’t need to be completed within the option period, there just needs to be a final agreement of what will be done before close.
with an amendment. An amendment is a document that makes a change to the contract. For example, the inspector reports that, 1.) The water heater needs to be replaced, 2.) The roof has a few rotting shingles, and 3.) The attic is poorly insulated. You may present this to the seller, and they may agree to fix only two repairs, the shingles and the water heater. Your agent would write this in an Amendment and both seller and buyer would sign. This should be agreed upon within the option period. Remember, the repairs will need to be done before closing, not before your option period is up.
As soon as your offer is accepted, you should schedule an inspection. Your real estate agent will assist you with this process. The inspection should be done within your option period, so there will be time to make necessary negotiations. Inspections can last a few hours, but I always encourage my buyers to be present for at least the end of it. The inspector can go over major present concerns as well as a few things he/she noticed that may not need repairs now, but probably will in the future.
When we get the report back, you should review it, and your real estate agent will send the seller an amendment with the repairs you would like to have fixed. Sometimes this can be in the form of a dollar amount. We need to be mindful of the option period and be sure to make all necessary negotiations within this time frame. If you then decide to back out of the contract, you will get back your earnest money but lose your option money as well as the cost of an inspection, which usually starts at $290.
After negotiations have concluded, the next major hurdle is the appraisal. Your lender will hire an appraiser to ensure the property is enough to cover a loan in the case you stop making payments. The appraiser researches similar homes in your area and compares recent sales to determine the market value of the home. Let’s say you put an offer on a home in an “up and coming” neighborhood. You love the home and submit a full price offer of $290,000. So you go through the inspection and your option period ends. Everything is going well, but then the home doesn’t appraise. The appraiser has looked at other homes in the neighborhood and can’t find comparables that justify the price you offered. The appraiser thinks it’s worth $275,000. This can be an issue, resulting in more negotiations. There’s a $15,000 difference between the initial $290K and valued $275K. There are a few options. 1.) The seller will agree to lower the selling price, 2.) the buyer will come up with the $15,000 in cash, or 3.) the seller will lower the price slightly and the buyer will come up with the rest in cash. Sometimes, this can be a deal breaker, especially if the seller has no intention of lowering the initial price, and the buyer doesn’t have enough to make up the difference. The seller may then go with a backup offer or put the home back on the market.
Dang! Back to the Drawing Board.
Your offer may not be accepted. Don’t let it discourage you! Having your offer as a backup is a good choice. There are many reasons it could be rejected and isn’t uncommon in Austin. Dust yourself off and try again.