Buying a Pre-Owned Home in Dallas/Fort WorthWhen we find the right home – I will do a detailed analysis of neighborhood comps and, based on my extensive knowledge of the market, will advise you regarding how to structure a competitive offer. An offer includes MANY important terms – not just price – and we will discuss each of these terms prior to submitting the offer. Based on your input, I will write the offer, email it to you for electronic signatures, and then submit it on your behalf to the listing agent (who represents the seller), together with the preapproval letter that you have obtained from the lender. The seller will then accept, reject, or counter your offer; we will then confer regarding next steps with the goal of negotiating a contract that is in your best interests and acceptable to the seller. If the seller accepts your offer (immediately, or after some negotiation), they sign and either I or the listing agent will “execute” the contract.
Several things will take place as soon as a contract is executed:
- Option Period, Inspections, and Repair Requests: What is called the “option period” (the length of which is negotiable and is part of our offer) begins immediately, and ends at 5pm Central on the final day of the option period. During the option period, you have the UNLIMITED right to opt out of the contract for ANY reason. It is during this time that you would have any inspection(s) you wish, at your expense, and negotiate any necessary repairs.
It will be vital that you (or your designated representative) be present to meet with the inspector(s) at the home at the end of the inspection; you will also receive a written inspection report. We will then discuss whether there are any repairs you wish to request the sellers to perform; these are generally the more “major” items that the inspector has identified as being in need of repair/replacement or that are not “functioning as intended”. This would also include all repairs that your lender may require. I then submit any requested repairs to the sellers in the form of a written amendment. The sellers could a) agree to perform some/all of the repairs; b) offer cash in lieu of repairs; or c) refuse to perform repairs (this is rare, but it can happen). You would then determine whether the seller’s response is acceptable, or if further discussions are necessary. Once agreement is reached, the agreed-upon items/terms are documented via a written amendment signed by both parties prior to the end of the option period. This means that the buyer must schedule the inspection(s) and convey any repair requests to the seller in a timely manner that provides the seller with adequate time to respond, and provides us with sufficient time for any necessary negotiations.
- Payment of Option Fee and Earnest Money: The buyer must write two checks as soon as the contract is executed. A check in the amount of the option fee is written to the seller, and a check in the amount of the earnest money is written to the title company handling the transaction. I will deliver both checks on your behalf and have them receipted. The seller can cash the option check immediately. If you do not opt out of the contract, and the transaction reaches the closing table, the option check will be credited back to you at closing. Similarly, the title company will cash the earnest money check immediately. This money will be held in escrow until closing, at which time it is credited back to the buyer. Should the buyer opt out, the earnest money is returned to the buyer.
- Loan Application and Approval: Also as soon as the contract is executed, you will need to complete an actual loan application with the lender, lock an interest rate, and provide any documentation required by the lender in order to obtain final loan approval. The lender will also order an appraisal, to ascertain that the value of home is equal to or greater than the sales price specified in the contract.
As soon as the option period ends, the contract becomes “pending.” You will continue to work closely with the lender, and with my Transactions Coordinator, to ensure that all necessary documentation is in place. During this time, you will select your home warranty provider (should you choose to do so) and secure homeowners insurance coverage. When all lender underwriting conditions have been satisfactorily addressed, we will receive “clear to close,” meaning that we can proceed toward closing the transaction. You will receive a final closing statement, which will specify the precise amount of cash you will need to pay at closing. This amount will include your down payment, actual “closing costs” (which are primarily charges from the lender and title company), and prepaid interest, taxes, and homeowners insurance, plus the amount of any prorations due to the seller (for example, prepaid HOA dues), and minus the amount of any funds you may qualify for from buyer assistance programs.
In general, both parties close on the same date at the office of the title company handling the transaction. If a party cannot accommodate this, the title company will – with advance notice – arrange for a mobile notary or some other mechanism by which all parties can close in a timely manner, as specified in the contract. The title company will also transmit instructions to you regarding acceptable forms of payment – which are generally either a cashier’s check or a wire transfer.
After both parties close and the transaction “funds,” you can obtain the keys and take possession of your new home! After closing, your first mortgage payment will not be due on the first of the very next month – it will be due on the first of the FOLLOWING month.