What to Expect After Going Under Contract on a Property
Congratulations on reaching a major milestone in your home-buying journey—you’re officially under contract! Now, it’s time to focus on the steps ahead to ensure a smooth path to closing day. At this point, your real estate agent should provide you with a Critical Dates Checklist to keep track of all the important deadlines in your contract. If you’re financing your home purchase with a loan, it’s crucial to avoid making any major financial changes like purchasing new items, changing jobs, or opening new credit lines, as these actions can impact your loan approval. Once closing is complete, you’re free to make all the changes you’d like!
Let’s break down what to expect from now until closing day:
Initial Escrow Deposit
- Due Date: The initial escrow deposit is typically due within a few days after going under contract. This deposit shows your commitment to the purchase and is held in escrow until closing.
Home Inspection & Additional Inspections
- Purpose: The inspection period is one of the most critical steps after going under contract. This is your opportunity to fully understand the condition of the property. While the seller is not obligated to make repairs under an “As-Is” contract (commonly used in the Florida Keys), the inspection allows you to uncover any potential issues with the home and decide if you want to proceed with the purchase.
- Inspection Options: During this period, buyers can—and should—conduct any inspections they deem necessary. These can include, but are not limited to:
- General Home Inspection: Covers the roof, foundation, plumbing, electrical systems, and overall condition of the home.
- Termite Inspection: Checks for any signs of termite activity or damage.
- Mold Inspection: Especially important in humid environments like the Florida Keys.
- Seawall Inspection: If the property has a seawall, it’s vital to ensure its structural integrity.
- Pool Inspection: If the property has a pool, this inspection checks the pool’s condition and equipment.
- Plumbing & Electrical Inspections: These more detailed inspections can provide insight into systems that may not be covered in a general home inspection.
- Insurance Inspections: During this time, it’s also a good idea to arrange for inspections required for obtaining homeowner’s insurance, such as a 4-point inspection (for older homes) and a wind mitigation report.
- Timeline: Inspections typically take place within 7-15 days of going under contract. If possible, attend the inspections to ask questions and get firsthand insight from the inspector.
- Next Steps: After reviewing the inspection reports, decide if you want to move forward with the contract. If you choose not to, you must notify your agent in writing within the inspection period.
Secondary Escrow Deposit
- Due Date: This additional escrow deposit is usually due the day after the inspection period ends, signaling your continued commitment to the purchase.
Appraisal
- Why It’s Important: If you’re financing the purchase with a mortgage, your lender will require an appraisal to confirm that the property is worth the agreed-upon price. This protects both you and the lender from overpaying.
- Timeline: The lender typically orders the appraisal within the first few weeks after going under contract. It’s important that the home appraises at or above the contract price, as a lower appraisal could affect your financing options.
Survey and Elevation
- Property Survey: A survey will be conducted to verify the property’s boundaries and check for any encroachments.
- Elevation Certificate: Especially in areas like the Florida Keys, an elevation certificate will determine the home’s flood zone status and influence insurance rates.
6. Loan Approval
- Finalizing Financing: During this time, your lender may request additional documentation (e.g., bank statements, employment verification, tax information). Be prepared to provide these promptly to avoid delays. This financing contingency period allows the buyer time to secure a mortgage loan. If the buyer is unable to obtain financing within this period, they may be able to terminate the contract without penalty and have their escrow deposit returned.
- Interest Rate Lock: If you haven’t locked in your interest rate yet, now is the time to do so. Your lender will advise you on the best time based on current market trends.
Title Search & Title Insurance
- Purpose: A title search ensures there are no outstanding claims, unpaid taxes, or disputes over the ownership of the property. Title insurance protects you and the lender from any future legal claims against the property.
- What to Expect: Your title company or attorney will handle the title search. Any issues, such as old liens or unpaid taxes, must be resolved before closing.
Bind Insurance
- Getting Coverage: Before closing, you’ll need to secure homeowners insurance. Your lender will require proof of insurance before releasing funds.
- Shop Around: Take the time to compare coverage and rates from multiple insurance providers. Be sure to bind your policy well before closing to avoid last-minute delays.
Turn on Utilities for Closing Day
- Ensure you have called the utility companies (electric, water, propane) and let them know the tentative day of closing so that they can ensure transfer on closing day.
Final Walkthrough
- When It Happens: The final walkthrough typically occurs 24-48 hours before closing. This is your opportunity to ensure the property is in the same condition as when you made the offer, and that any agreed-upon repairs have been completed.
- What to Look For: During the walkthrough, confirm that all appliances are working as they were on the day of inspection, that no new damages have occurred, and that the home is ready for move-in. If anything is amiss, now is the time to address it with your agent before signing the closing documents.
Closing Day
- The Big Day: This is when the final paperwork is signed, the closing agent will wait in line to transfer the seller’s funds and record the title, then ownership of the property is officially transferred to you. Be sure to bring your identification, proof of insurance, and have your bank prepared to send any required funds for closing costs.
- Review the Documents: You’ll sign several documents, including the final loan paperwork and the deed. Review everything carefully and ask questions if anything is unclear.
- Transfer of Ownership: Once the lender releases the funds to the seller, the title is transferred to your name, and you’ll receive the keys to your new home!
How Your Real Estate Agent Helps
Your real estate agent plays a crucial role in ensuring a smooth transaction. Here’s how they continue to support you after going under contract:
- Managing Deadlines: Your agent will track all critical dates, from the inspection period to the closing date, ensuring you never miss an important milestone.
- Negotiations: Whether it’s negotiating repairs after the inspection or helping navigate the appraisal process, your agent will advocate on your behalf.
- Closing Coordination: Your agent will coordinate with the seller’s agent, lender, title company, and all other parties involved to ensure everything is ready for a seamless closing day.
Going under contract is an exciting step, but it’s only the beginning of the final phase in your home-buying journey. Understanding the next steps will help ensure everything moves forward smoothly and prepares you for the big day—closing day!
If you have any questions or need assistance at any point in the process, The Florida Keys Home Team is here to help.
For more information or to get in touch, contact us at:
📞 The Florida Keys Home Team at Coldwell Banker Schmitt Real Estate Co.
📧 Jamieinthekeys@gmail.com
🌐 www.BuyInTheKeys.com
