Making an Offer
Before the offer to purchase is created, it is very important that you have been pre-approved by a lender. This is one of the best negotiating tools a buyer can have. It shows the seller that you are financially able to purchase the home.
After you have found the right home, it is time to prepare the offer.
I liken the offer process to be like a game of tennis. The seller has laid out the court and has provided the balls and rackets and has invited everyone to play. You, the buyer, have first serve so your offer includes what you want to pay for the home, how much you will put down and how much you will finance, what if any furnishings you want included with the home, possibly a home warranty, the timeframe for closing, and a host of other items. The seller then has the option of accepting your offer, countering your offer, or outright rejecting your offer. And this goes on until both parties come to a mutual agreement. Can you see the tennis ball going back and forth?
Once both parties agree, you are offically under contract or "in escrow", and the clock starts ticking on the deadlines that are in the contract.
The Utah Real Estate Purchase Contract (REPC) is focused on protecting the buyer from getting in over their head. The REPC, which is what you use to make your offer, includes four contractual deadlines that must be met to be a valid legal contract:
1. Sellers Disclosure: The seller must disclose everything they know about the property on a form that ask specifics about how long they have owned the property, what improvements have they made, if there have been any leaks, etc. Also, the title company will do a preliminary title search to ensure that the seller has legal title to the property and that there are no liens or encumbrances that must first be handled before the property can be conveyed to you, the buyer. If there is any information on the seller disclosure that makes you reconsider the purchase, you can ask for details, renegotiate pertinent items on the contract, or cancel the contract and have your earnest money returned.
2. Buyers Due Diligence: This is the time for you to have any inspections you'd like done - at your expense - and to do your research. You can have a home inspection, pest inspection, foundation inspection, septic inspection, make sure the home is not in a flood plain, get homeowners insurance quotes, verify utility availability and costs, or check to see if any neighbors are on the sex-registry. Anything you want to know about the home and neighborhood - now is the time to find out. If there is information that comes to light during this period that makes you reconsider the purchase, you can ask for more details, renegotiate the pertinent items on the contract, or cancel the contract and have your earnest money returned.
3. Financing & Appraisal: If you are getting a loan, your lender will need to have loan documents go through initial underwriting review by this time to ensure that you can get a loan for the specified loan amount to purchase this home. Also, the appraisal must come back at or above the contract purchase price or your lender will not give you the money to purchase the home. There are a lot of moving parts here, but suffice it to say that if your financing is not in place or the home does not appraise for the purchase price, you can renegotiate the pertinent items on the contract, or cancel the contract and have your earnest money returned. This step may be bypassed in a cash transaction.
If you cancel the contract after this deadline has passed, you lose your earnest money and may be sued by the seller for breach of contract.
4. Settlement: It takes some time, usually about a week, from the time your lender gives the go-ahead until the time the title company has all of the closing documents ready for signature, and final underwriting has been completed. Settlement is when both parties sign the closing documents. Closing is when the signed documents are recorded at the county courthouse, the funds are distributed, and possesson of the property officially changes hands. Settlement and closing often happen on the same day, but not always. If one of the parties is not present at signing and the orignal documents need to be overnighted, then closing may be postponed until the next business day.
The total time from initial offer to closing is typically 30-45 days, and I will be with you every step of the way!