What Happens Now?
After reaching the pinnacle of either accepting an offer (as a seller) or having an offer accepted (as a buyer), the next question becomes "Well, what happens now?" I've got your answers here.
Congrats on the accepting of the offer or having that offer accepted! What follows, for your help!, is a chronological list of how things should proceed after an Accepted Offer.
1. Pick an attorney
It's pretty tough, in New York, to complete a real estate transaction without an attorney. It is also pretty tough to get on their calendar. So, I highly recommend that you do this before you put your home on the market or before you start shopping for a new one. A good lawyer is your advocate throughout the transaction and if you are a buyer, often the only person who has your best interests in mind. I personally would not buy or sell real estate without one and you shouldn't either. Rules for picking a lawyer are the same as they are for picking any professional: get a recommendation if you can and pick someone you trust and feel comfortable with.
2. Get the attorneys to start communicating
The person on the other side of this transaction will have an attorney as well (if they don't, good luck getting into contract). You'll want to insure that both attorney's have each others contact information. What good agents and brokers usually do is give each attorney a one page Deal Sheet. The Deal Sheet contains the contact information for the buyer, the seller, their attorneys, the sales price and the escrow down payment (this is usually 10% of the purchase price and is different from your down payment for financing). If you are not working with a broker, then just put you're your own deal sheet together. You should send the deal sheet to each lawyer within a day of the accepted offer. A well organized Deal Sheet will save a busy lawyer time and get you to contract sooner rather than later.
3. Seller's attorney will send out a contract to the buyer's attorney
The attorneys will probably negotiate a bit on some of the details, but they usually come up with a document that they will let their clients sign. You really want to make this happen within two weeks--before the person on the other side of this transaction changes their mind.
4. Sign the contract
You will meet with your attorney, who will advise you about the specifics of the contract. You should ask any questions you have here and, if all goes well, you'll sign the contract. If you are the buyer you will also write out a check--usually 10% of the purchase price--which will be deposited in an escrow account.
5. Choose a mortgage broker or bank (buyers only)
Like picking an attorney, this is something I recommend you do before you even start shopping for a place. Most lending institutions will issue you a pre-qualify letter which will state that you are capable of borrowing up to X amount of dollars. This is a good way to prove to a seller or broker that you and your offer should be taken seriously.
6. Appraise the Property
When you boil it all down, banks only judge a transaction by two criteria:
Will the buyer pay back the loan?
Is the property worth enough to justify the loan?
To determine the latter, the bank or mortgage broker will hire a licensed appraiser to estimate the value of the property.
7. Bank issues a commitment letter
After the bank has done its due diligence on the buyer and the property, it will issue a commitment letter. This is the letter that says the buyer is approved for the mortgage. It states the interest rate, amount, and term of the loan (among other things). Once this letter is received, you can schedule the closing.
8. Schedule the date of the closing
The seller, the buyer, their attorneys, the bank's attorney, and a title insurer, will all break out their date books and figure out the best day to finalize the transaction (be patient, this can be harder than seating your relatives at a wedding).
This is where the rest of the money exchanges hands and the buyer gets the keys. Essentially this is how the money will be distributed:
a) The seller's attorney will write a check to the seller from her escrow account. This will be equal to the check the buyer wrote when he signed the contract.
b) The buyer's bank will write a check to the seller for the amount that the buyer is borrowing from the bank. (That's right; the buyer never gets his hands on the money.)
c) If after steps a) and b), there is money still due to the seller, the buyer will write a check for this amount. In addition to all of this, with your attorney's help, you will sign half-a-ton of documents (buyers, you will actually sign a ton-and-a-half). Once you are done you can ...
In or out, depending on who you are. And you can almost always do this immediately after you close.
Feel free to forward any questions my way. Thanks for reading, Jim.