If you think the drudgery of going out week after week to find a home and then beating your competition is a marathon, get ready for the sprint.
Once a seller accepts your offer, time passes to all of the things you need to do to be ready for settlement. Failure to meet any of the deadlines outlined in the sales contract could result in not only the loss of the home, but possibly your deposit.
If your contract contains a “time is running out” clause, it is a notice to both parties that failure to complete a required performance by a date stipulated in the contract will be an incurable breach. And real estate contracts are full of deadlines.
The many tasks ahead include applying for and obtaining financing, obtaining home insurance, obtaining and reviewing documents from the owner or the condominium association, and scheduling an inspection. independent. You may even need to make a second deposit by a certain date.
Many agents give their clients a list of deadline contingencies that need to be met, so you should start making appointments immediately.
These are not guidelines
Sometimes, however, agents drop the ball, leaving the seller’s agent to take over. Most can complain a bit about having to get the job done on the other side, but they usually do it to preserve the deal and save their commissions.
This is what happened to broker Tammie White of Franklin, Tennessee Homes Realty a few years ago. Plagued with title issues, the seller twice requested extensions. But during both add-ons, not a word was heard from the seller’s agent, White posted on ActiveRain at the time. So his client found another house.
It wasn’t until the day after the broker informed the seller’s agent that his client wanted his deposit back that the agent told White his client was ready to close. Too late. The case was destroyed. Later that week it happened again, but this time White was working on behalf of the seller, and the buyer missed the deadline to sign a repair endorsement.
Completion dates are not suggestions, nor “guidelines” that can be twisted or broken.
“They are designed to protect buyers and sellers,” White advised. “They shouldn’t be overlooked or left behind. All parties should know the dates and ensure that the corresponding documents have been signed correctly. When they haven’t, you may wake up to realize that the contract is null and void.
All contracts are different and none of this should be taken as legal advice. But as an example of how it can work, the standard contract in Pennsylvania gives a seller five days from the end of the inspection clause to respond. Thus, if a buyer submits an amendment to his requests on the ninth day of a 10-day period, the seller has six days to respond.
Some states have two time limits
Most reports contain at least one milestone. But Massachusetts has two key deadlines. Here, according to broker Matt Dolan of Sagan Harborside Sotheby’s International Realty in Marblehead, the two-step process involves an accepted offer, followed by an inspection, and then a purchase and sale contract which is a more detailed version of the offer.
One of the most troublesome deadlines concerns the unforeseen inspection. While any number of days can be written into the contract, buyers typically have seven to 10 days to locate an inspector, receive the report, and notify the seller of any repairs, if any, that are requested. (Unless stated otherwise, “days” generally means calendar days, not business days.)
If buyers miss the deadline, they will likely be required to proceed with the transaction, even if the inspection reveals major issues that buyers really don’t want to address. Either that or, if they decide not to proceed with the sale, they could lose their entire deposit.
Now suppose you have had the inspection and handed over a list of items that you want the seller to fix, all within the allotted time. At this point, however, the seller has several written days in the contract to respond. The job does not have to be performed during this period; rather, it is a question of whether the seller agrees to have the repairs done before the closing date.
Maybe the seller will agree to do all of the work that buyers ask for, or maybe just part of it. Maybe they’ll agree to set aside a certain amount at closing to cover costs so buyers can do the job as they see fit. Or maybe they’ll say no to everything. Then it’s up to the buyers to decide how they want to proceed, again within the time period specified in the contract. It’s all been a pretty hectic few weeks.
Another key deadline is the request for funding. Applications must be submitted within the time limits specified in the contract and approval from the lender must be received within days. Be aware, however, that the lender will not order an appraisal until the round trip inspection has been resolved.
But if you miss the mortgage application deadline, the seller might take an offer from someone else. And they might keep your deposit as compensation for taking their place off the market until you meet your end of the market.
Although obtaining home insurance is not usually part of the contract of sale, it is a requirement of the lender that must be met before closing, otherwise the closing will be delayed. Your loan officer or loan officer should remind you. But don’t drop the ball, even if they do: call your insurer ASAP to get things done.
The seller is responsible for providing the HOA documents within a certain time frame – again, as stated in the contract. And then the buyers have so many days to review the papers. If buyers find something objectionable, they can go back. But if they missed their deadline, they might be forced to push the sale forward.
Finally, there is the closing date, the day that everyone should aim to sign all the necessary papers and hand over the keys to the new owners. This date is subject to negotiation, but once agreed upon and written into the contract, it should be your target.
The closure can always be postponed for a few days by mutual agreement. But if you haven’t dotted all of your I’s and crossed all of your T’s, you might be stuck with a truck full of furniture and a car full of kids with nowhere to go.
Lew Sichelman has been covering real estate for over 50 years. He is a regular contributor to numerous housing magazines and to housing and housing finance industry publications. Readers can contact him at [email protected]