You did it, you beat the competition and got the home you love under contract. Now what happens? Actually quite a bit, so let’s go over it.
The contact you just signed obligates you and the seller to do a lot of things in a short period of time. Your agent can help you keep all the dates, deadlines and obligations organized so you don’t feel overwhelmed. (Quick tip: Since the contract is so important why not ask your agent to give you a copy of one before you even find a home? That way you can read it before things heat up and understand what you’re signing!)
Think of the under contract period as your chance to do all your homework on the property. After all, you had to bid on it right after you saw it which is nerve-wracking! Buyer’s remorse is a real thing in this market so if you are feeling a little uneasy take a deep breath and know that’s normal. This is your chance to step back, analyze the property, the title work, the homeowners association (if there is one) and make sure you are getting what you thought.
We won’t cover every little detail of what needs to happen here but we do want to touch on the main things you want to watch out for in this phase of the process.
The dates and deadlines section of the contract is critical. It outlines all the deadlines you need to meet regarding certain items like having the inspections done, the HOA documents reviewed, the title work reviewed, the home appraised, your loan approved and getting the deal closed.
Colorado is a very buyer-friendly state and your earnest money (the money you put down up front with your offer to show you are serious) isn’t actually at risk until these dates and deadlines pass. For example, buyers can back out if they don’t like the condition of the property, in their sole discretion, as long as they do so before the Inspection Objection Deadline. This should give buyers some peace of mind if they are concerned about making offers quickly on homes they’ve only seen once.
If the buyer appropriately backs out of the contact using one of their “outs” I’ve discussed above (appraisal, inspections, loan approval, etc) the buyer receives their earnest money back and the seller can then re-list the property and seek another buyer. If the buyer inappropriately backs out for no legitimate reason the seller gets to keep the buyer’s earnest money and then re-list the home to find another buyer.
The first thing you want to do once you are under contract is get the signed contract over to your lender. You want to get him or her started on their process right away so don’t delay, send them the contract the same day it’s signed.
Another item you’ll want to tackle right away is signing all the property disclosures. These are completed by the seller and they’ll tell you everything the seller knows about the property. For example, if there is a structural issue and the seller knows about it they must disclose it. So why not read these right away and if you find something that scares you the contract can be cancelled right away under your inspection clause. (Quick tip: Not all sellers are as honest as they should be, so trust but verify what they are claiming in their disclosures)
Assuming the disclosures look fine you’ll want to line up your property inspections, then order your appraisal and work on receiving your final approval so you can move towards closing. All of these will be covered in the next steps.
The key item to understand is the contract is the document that drives the whole transaction and spells out what each party will do throughout the process and when.