What Happens Between Accepted Agreement and Closing?

When is an offer executed?

In the state of Pennsylvania, once buyer and seller sign an Agreement of Sale, and all initials and dates are in the required places, that document is considered executed. Typically, especially if the buyer has a mortgage, the settlement occurs roughly six weeks later. Both buyers and sellers often wonder what happens during that time period, both behind the scenes and otherwise.

What are buyers doing post-execution?

Buyers need to:

• Send a copy of the executed Agreement to their lender to officially begin the mortgage application process and provide any required documentation.
• Send (check or wire) their deposit to the listing broker (some brokers won’t hold “escrow” and ask for it to be held by the buyer’s title company).
• Arrange for any inspections being performed and then reviewing the report with their agent–if estimates are needed, those must be obtained and the buyer should furnish the seller with a Reply to Inspection within the time period mandated by the Agreement. Further inspection-related negotiations between buyer and seller will occur until buyer terminates, accepts property “as-is” or both parties sign documents stating what, if any repairs or credits have been agreed to.
• Understand timing for settlement and moving; request time off from work, arrange babysitting/pet sitting, etc. if applicable.
• Research homeowner’s insurance, which must be in place by closing.
• Set up pool/lawn care services (and ask sellers whom they use)
• Prepare for the actual move–secure a date for movers, start boxing things up, figure out specific logistics of moving day (and don’t forget to think about pets).
• Contact utilities (water, electric, gas/propane, cable, trash) to transfer from seller to buyer.
• Once closing is imminent, fill out mail-forwarding card at the post office.

What is the seller doing?

• If buyer is having inspections performed, negotiate any issues that arise and sign documents stating what, if any repairs or credits have been agreed to.
• Understand timing for settlement and moving; request time off from work, arrange babysitting/pet sitting, etc. if applicable.
• Cancel homeowner’s insurance (as of settlement date).
• Cancel pool/lawn care services (and offer info to buyers)
• Prepare for the actual move–secure a date for movers, start boxing things up, figure out specific logistics of moving day, (and don’t forget to think about pets).
• Contact utilities (water, electric, gas/propane, cable, trash) to transfer from seller to buyer.
• Once closing is imminent, fill out mail-forwarding card at the post office.
• Be sure to maintain property (including lawn) in same condition, especially if vacant

What is happening behind the scenes?

Once the property is under contract, the agents for both parties are acting as liasons between buyers and sellers (and negotiating any inspections, purchasing of furnishings, etc.) and making sure that the lender, title company and transaction administrators are all staying on track for closing. For example, the title company needs to order title and review all the paperwork to be sure the property can be transfered unencumbered by any liens. The title company will determine what reimbursements (from buyer to seller or seller to buyer) will be made and reflected on the settlement sheet. The lender will be reviewing financial documents, ordering the appraisal and all of the data will eventually be reviewed by the underwriter. Often, either the agents or their admin team is responsible for providing mortgage payoff statements and social security forms, and ordering tax and sewer certification. The agents arrange a time and place for settlement, make sure there is access to the property for the appraiser and that any documents required by any parties are provided.

Regulated industries don’t rush

Many people are frustrated that it can take a lender at least a month to close. Recognize that the mortgage industry is heavily regulated (for everyone’s protection) and that the lender has to verify everything–they are making a large investment and need to make sure they don’t miss anything important. Similarly, the title company has to look through all paperwork that may have been filed regarding ownership of the property, as well as check out your name to be sure you don’t have any outstanding legal issues that would preclude you from buying a home. It may seem like a lot of “fine print” or “legal mumbo jumbo”, but it’s there to protect everyone in a very high stakes transaction.