After the Contract Signing – The Home Purchase Transaction Process

A home purchase is a major financial commitment, and there are a lot of transactional balls in the air until signatures at the closing table. Most of them are handled by real estate agents, the title company, and an attorney or two. The agents and vendors are handling details, but some will require your approval and input.

Deadlines and Deliveries
There will be some deadlines and document deliveries in the contract. You should know what they are, though many are handled by your buyer or seller agent. Some of these deliveries and deadlines will require your involvement and perhaps your approval. They include:

• • Home inspections deadline.
  • Delivery deadline for the inspection report.
  • Deadline for buyer objections to the inspection report and requirements for repairs or compensation for issues.
  • Deadline for seller response to inspection objections.
  • Abstract or title insurance binder delivery.
  • Deadline for any buyer objections to the title binder.
  • Deadline for seller response to the objections.
  • Buyer mortgage approval deadline.
  • A survey or Improvement Location Report delivery.
  • Buyer deadline for objections to the survey or report.
  • Deadline for the seller to respond to any objections from the buyer.

Those are the major contingencies in most home purchase transactions. There can be others. An example would be a buyer contract contingency that the seller leaves the free-standing hot tub that was not shown as staying in the listing. There can be any number of negotiable contingencies or situations that crop up during the transaction.

The Home Inspection
The buyer normally chooses the home inspector. When the report is delivered, the buyer and their real estate agent work together to review it and decide if there are any issues in the report that require demands on the seller. There are almost always issues, as no home is perfect. Many have deferred maintenance issues, such as torn window screens, cracks in exterior stucco, and other even relatively minor issues. The inspector doesn’t want to leave anything unreported.

Whether the buyer wants to make an issue of any or all of the issues in the home purchase report is their decision. If there are problems important to the buyer, a document is prepared with requirements for the seller to keep the deal moving along. The buyer may want the seller to make repairs or credit the buyer money to have the repairs done after closing.

The Abstract or Title Insurance Binder
These days there is usually a title insurance binder that binds the insurer to issue title insurance if certain requirements are met. The binder will also specify “exceptions” to coverage, items that will not be covered. Usually, the required items, such as payoff of an existing mortgage, are normal, expected, are handled in the course of the transaction. Some may require an ex-spouse to provide a quitclaim deed to release the property from any future claims, as an example.

As for exceptions, there are a number of these that are not negotiable, as the insurer doesn’t want to cover things that happened before and cannot be changed, such as the original land grant, or HOA, Homeowner Association, rules. Overall, it isn’t common for there to be problems with the title insurance binder.

The Survey or Improvement Location Report
The survey process is also usually a matter of course without complications. However, there can be things that have changed since previous surveys, such as a neighbor’s fence encroaching on the property. The buyer submits any objections to the survey, and the seller responds. This isn’t common, but it happens, especially in rural areas, as subdivisions are usually quite structured as far as the lot borders.

All of this is normal, especially when working with an experienced broker, with most deals moving successfully to the closing without disputes or problems. It is helpful for both buyers and sellers to understand these major pieces of the closing puzzle so they’re not taken by surprise.