Gold Country Media asks me to write articles for the Inside Lincoln Magazine and for the News Messenger every now and again. Here is one I wrote that gives an outline of a real estate transaction. I think it is important for buyers and sellers to have an understanding of what goes on behind the scenes. There are a lot of phone calls, emails, coordination and time spent by good agents. It is more than just putting a sign out or writing an offer. This is still oversimplified but gives an idea of what happens:
Road Map to a Real Estate Transaction
Some buyers and sellers really aren’t interested in the details of what goes on during a real estate transaction. Others want to be very involved and want to know all the inner workings of a deal. There are some real estate agents that would rather keep their clients in the dark, but it is important for both buyers and sellers to be educated regarding the process. This article will give you a quick outline of what you may expect during a real estate transaction.
1) Listing agreement and preparation for market. Seller will meet with the agent they have chosen and sign a listing agreement that clearly shows the price the property will be listed at and the term of the agreement. The agent should make recommendations about how to make the property more marketable. Pictures will be taken and other marketing will be prepared. Video tours are becoming more popular for the higher price range.
2) Showing the property. The listing agent and other buyer agents will show the property. It makes it much easier to show if the property has a lockbox and the owners aren’t present at the time of showing.
3) The Contract. The buyer agent will meet with their buyer after showing the property. It is not uncommon for a potential buyer to look at the home more than once. The agent should give advice about actual value of the property. The list price may be higher or lower than the comparable sales and the agent should show the buyer some of the past sales in the neighborhood. The buyer must be preapproved and the agent should work with the buyer and their loan officer to formulate the offer. The listing agent will go over the offer with the seller and either accept, counter or reject the offer.
4) Once an offer is accepted it becomes a contract. At this point, a lot of things happen simultaneously. Escrow is opened with a title company; the preliminary title report and a natural hazard disclosure are ordered. The buyer’s earnest money deposit is submitted to escrow and inspections are scheduled. The seller will fill out disclosures with their agent and the buyer will be able to review them. The inspections may include a pest inspection and a whole house inspection. Depending on the property you may want to do a well test, septic pumping, pool inspection, roof certification or other tests under the advice of the agent. At the same time the loan officer will be asking the buyer for updated documentation, order an appraisal and be working to package the loan for underwriting.
5) Contingency removal. This is an important step in the transaction. There is a set time for the buyers to do all their inspections, review the disclosures, get the appraisal and have the loan approved. In most transactions the period is 17 days, but lately some sellers require that the period is tightened up to 10 days or less. The buyer’s agent will have a form that will need to be filled out that indicates everything is in place and the buyer is ready to move forward to close the deal. In a regular transaction, there may be a request for repairs that should be worked out prior to contingency removal.
6) Final walk-through and signing. The buyer will do a final walk-through within 5 days of the close of escrow to make sure the property is in the same physical condition as when they made the offer. They will check to see if all of the agreed upon repairs have been done. Both buyer and seller will have appointments set with the title company to sign all the final transfer documents. The buyer package will be larger as it will include their loan documents as well. Buyer will bring in their down payment money and after the documents are signed, the title company will request funds from the lender and then send the transfer deed to the county to record. Upon recording confirmation, the title company will notify the agents and the buyer will get the keys.
This is just a general outline and simplification of what should happen during your transaction. Every transaction is different and each has challenges that will need to be met and overcome. It is important that you have a good agent that is aware of the timelines and has good communication with the parties involved. As a buyer or seller you may not be aware of all the work that goes on behind the scenes. Contact a professional agent in your area to work for you in making your transactions seem easy.