- Appraisal–Once inspections have been satisfied, you will be awaiting the appraisal. The appraisal is important because the way the agreement of sale reads (if the buyer’s agent has filled it out properly, which is not a foregone conclusion) is that the lender will lend a certain percentage (let’s say 80%) of the “loan to value ratio”. That means that they will lend 80% of the appraised value. If the appraised value is below the agreed-to purchase price, the buyer has the right to walk away with the return of all deposit monies, or, buyer and seller can come to mutually agreeable terms. Sometimes, the buyer will agree to make up some or all of the difference out of pocket, but, often, sellers find that they will lose they deal if they don’t lower the price to the appraised value. What you offer in this scenario will probably depend on how much other interest there was/is in your house.
- Mortgage commitment–The mortgage commitment is a document from the bank that supersedes the pre-qualification the buyer provided with the offer. This paperwork is generated after the lender has checked all of the buyer’s financial information and verified employment, etc. It’s a commitment from the lender (barring any major change in the buyer’s financial position) to fund the loan. If the bank, upon checking all of the buyer’s info, discovers information that means the buyer will not meet their underwriting guidelines and, therefore, cannot issue a commitment, you as the seller can terminate the contract, return all deposit monies to the buyer and begin marketing the property again.
- Title commitment–The title commitment is proof that there are no filed liens against the property or claims of ownership by other parties that could possibly delay or prevent clear title from being transferred. If the IRS or a contractor who did work on the house and didn’t get paid has filed a lien, it would show up as a “cloud” on the title. These are rare, but ability to transfer clear title must be confirmed.
Once the above documentation has been received and any issues worked out, it’s a matter of preparing to move. Call the moving company, make arrangements to move yourself and your belongings to the next stop on your life’s itinerary. Call the utility companies and arrange to have utilities shut off in your name on the settlement date. Fill out a mail forwarding card at your post office. Arrange for a cleaner to come right before settlement (if you can move out more than the night before) so the buyers can move into a clean house. Be sure to gather keys, garage door openers and any instruction manuals for appliances staying with the house to leave for the buyers. It’s nice to make a list for the buyer of service people (landscaper, pool company, stone mason, plumber, electrician, painter, etc.) who have worked on the house. Also, don’t make any mortgage payments the month of settlement unless otherwise instructed to do so. All of the tax credits and sewer and trash credits should be figured out by the title company. They will send you a closing disclosure a few days before settlement with these figures so you can check that they are accurate. They will call the bank for your mortgage payoff statement, and will contact you if there is any other information they need.