There are a lot of steps involved in buying a home. One of the most important is making an offer. That’s when you put in your bid on the property you want to buy.
While it’s exhilarating when the seller accepts your offer, you’re only partway through the homebuying process.
So what happens after you make an offer on a house? Here are seven steps in order of how they happen.
What's in this Article?
What happens after you make an offer on a house?
You’ll submit your offer on the home with the help of your real estate agent. They can advise you on how to make it competitive and appeal to the seller.
1. First things first: get an accepted offer
Assuming you plan to get preapproved – which is essentially a must in the current market – the fact that you’re using one lender over another may be able to strengthen your offer as well.
“The first thing to do is ask your lender to call the listing agent on the property and help to ‘sell’ your offer,” says Scott Lushing, a loan officer with Fairway Independent Mortgage Corporation in Wilton Manors, Fla. (Fairway owns Home.com.) “A good lender, if they did everything right upfront, will be confident and be able to let the listing agent know that they already pulled and reviewed credit, received and reviewed both income and asset documentation, addressed any issues that would arise in underwriting, and that you are clean borrowers.”
Lushing advised that the loan officer can reassure listing agents not only about your credentials, but their company’s as well. An offer backed up by a credible lender and a hands-on loan officer can help you edge out other borrowers – even those who make higher offers than you.
“A listing agent wants to feel comfortable when accepting an offer. No one wants to go back and tell their seller that the financing fell apart because they didn’t vet the buyer’s financing that well,” Lushing says. Who you finance with is just as important as the amount you are offering. I have had offers get accepted that were lower than competing offers, but they were that confident in my timelines and ability to close quickly, and that mattered more to them.”
You’ll submit your offer (via the purchase and sales agreement) to the seller’s agent (listing agent) or seller’s attorney. The seller and their representative will review it.
“Then, one of three things can happen,” says Brian Coutu, mortgage advisor with Fairway in Fort Lauderdale, Fla. “The offer can be accepted as-is. The offer can be sent back to you with a counteroffer, which you can accept or negotiate further. Or the offer can be denied by the seller.”
In most cases, your offer will be presented rapidly to the seller, who should respond to you usually within 24 to 48 hours.
“The seller’s agent will often give some indication as to what the seller’s timeline is for reviewing offers, especially if there are multiple offers involved,” says Link Moser, a real estate agent with Experience Homes Group in Loudon, N.H.
Matthew Nuzie, a Realtor with RE/MAX Right Choice in Trumbull, Connecticut, says there’s a good chance your offer may not be the only one the seller receives, which could lead to a bidding war.
“If the seller has multiple offers, they could turn yours down if it’s not the highest or most preferred offer. If you are the only offer, the seller may accept it or counter your offer,” Nuzie says. “The initial offer will be in writing, but counteroffers could take place verbally.”
Once your offer is accepted, the sale contract and purchase agreement will be updated to reflect any negotiated terms, and you and the seller will sign it. This is called “going under contract,” meaning both parties have agreed to proceed with the transaction.
At this point, the seller cannot show the home to other buyers because they have committed to selling the home to you. It’s also at this point that you may feel buyer’s remorse, says Michael Graber, a branch manager with Fairway in Montvale, N.J. But don’t panic – he says that’s normal.
“Everyone is so heavily competing for a house that when you finally get one under contract, your disbelief leads to fear and confusion,” Graber says. “It’s natural, but it’s good to remind yourself of how lucky you are and proceed forward. Get ready to close on time and focus on the moving. Your journey now has its destination in sight.”
4. Make your earnest money deposit
There are several more steps to reaching that destination, though, which is why staying focused is important.
“Typically, the first thing you would do when going under contract is to send your escrow deposit in to hold your contract. This is a good faith deposit that will go toward your down payment and closing costs on your closing date,” Coutu says.
This deposit includes the earnest money fee, an amount agreed on in the sale contract to indicate your commitment to the property. If you live in a state where due diligence fees are common, such as North Carolina, you might also put down a due diligence deposit.
It’s important to think carefully about how much you commit to pay in earnest money and due diligence fees. Assuming you adhere to the terms of the contract and move forward with the sale, those deposits will be credited to your down payment and closing costs.
But if you’re not careful, you could lose those amounts.
“Your escrow deposit could be at risk and forfeited to the seller if you do not meet the terms of the contract,” Coutu cautions. “But if you meet the contract’s terms and cancel with a valid reason, your escrow deposit should be returned to you.”
However, the due diligence fee is non-refundable unless the seller cancels the sale. If you commit $1,000 in due diligence and decide after the home inspection that you don’t want to buy the house, the seller gets to keep the due diligence money as compensation for having taken the home off the market.
Luckily, due diligence fees are not customary in most regions of the U.S. Most sellers only require an earnest money deposit, which is refundable if the deal falls through for a reason spelled out in the contract ahead of time, such as an unsatisfactory home inspection.
It’s vital to work closely with your agent, lender, and attorney so that you can make sure you are only committing amounts of money you can afford to lose and that you fulfill the terms of your contract.
After you go under contract, the due diligence period begins, which can last anywhere from seven to 30 days.
“This is the time when the buyer and lender can identify any issues with the home and cancel the contract without any penalties,” as long as those conditions were spelled out in the contract beforehand, says Ralph DiBugnara, president of Home Qualified in New York City.
There are several common steps taken during the due diligence period, each of which typically has a deadline that has to be met. These are indicated in the purchase and sales agreement. These steps include:
The due diligence period is your opportunity to hire a professional home inspector who can do a general home inspection, which includes checking every component of the property and identifying any defects or potential problems. “Additional inspections and tests you can have done include an air radon test, air mold test, termite inspection, and a property scan for things like a buried oil tank,” Nuzie suggests. Inspections aren’t mandatory, but you shouldn’t skip this step, as you want to know everything you can about the property before you buy it. If there are any significant problems, you can negotiate with the seller (if they’re willing) to reduce the asking price or make the repairs before you close.
Your lender will order an appraisal that you, the buyer, will pay for. “The appraisal will establish a market value for the home and ensure it’s worth what you plan to pay for it,” Nuzie says. “The appraiser will come out to the property to do a field review. Then, they will go back to their office and complete their report. Within the report, you’ll find a detailed breakdown of the home and details on comparable properties used to determine the home’s value.”
The appraisal is critical, because your lender needs to ensure that the home is worth the amount of money they’re letting you borrow. If the home’s value is less than your loan amount, they will only approve you for what it’s worth. You’ll have to decide then whether to cover the difference yourself, negotiate the purchase price with the seller, or look for another home.
A search of the property’s title will be ordered by your attorney or agent and paid for by you. “The title search will reflect any liens on the property, easements, covenants, and/or restrictions that you may need to abide by. You can also opt to have a municipal title search conducted which will show any closed or open permits on the property,” adds Nuzie. Essentially, the title search indicates whether there are any obstacles to you taking ownership of the property or any legal concerns that could jeopardize the property’s value.
Loan application and processing
Once your offer is accepted and the contract signed, your lender will process your loan application. They may ask for bank statements, tax returns, pay stubs, and other financial records. Once all of your documentation is submitted, your loan officer will send it to the underwriting team, who will review your finances and clarify any red flags or potential issues with the loan. Underwriting will also review the appraisal report and title information to verify that the property is safe to lend on.
Closing and funding are the final steps involved in the purchase process. During closing, the property’s title transitions from the seller to you, you may perform a final walk-through of the property, and you and the seller examine, authorize, sign, and date several required legal documents – which can include a promissory note, closing disclosure, and deed of trust.
Three days before your closing, you’ll receive an initial closing disclosure, which you should review carefully. The initial disclosure includes all the details about your loan, including the loan amount, your interest rate and the interest you will pay over the life of the loan, your repayment terms, and other key information.
If anything is unclear, talk to your loan officer about it before you close. Once you’ve signed the loan documents and taken possession of the property, you’re responsible for fulfilling the loan terms as they’re written.
You may also do a final walk-through of the home, usually on the morning of closing day. “This walk-through will be conducted before the buyer meets with their attorney or title company to sign closing documents,” Nuzie says.
Later, you’ll sign all the rest of your legal paperwork, usually at your attorney’s office or title company office.
“The loan is officially completed when the mortgage loan is funded, with funds sent to the buyer’s attorney who passes it on to the seller’s attorney, at which point the sale is finalized,” Nuzie adds.
In many states, a title or escrow company handles the final distribution of funds to all parties instead of attorneys. Check with your real estate agent on who will handle these details for your transaction.
7. Get the keys
J. Keith Baker, chair of curriculum for Mortgage Banking at Dallas College, says many home loans close and fund on the same day.
“Once all the documents are signed and accumulated by the title company closing agent, the title company will notify all parties of the funding after they receive all money from all parties. This is when the loan is officially completed and homeownership changes from the seller to the buyer,” says Baker.
Make sure to ask your loan officer what your funding date will be. While it is often on the same day as the closing, that’s not a given, especially if you close on a Friday or late in the day. You won’t get your keys and take over ownership until the loan is funded and the new deed and ownership records are updated with your county.
Frequently Asked Questions
After making an offer, the seller will review it and either accept it as is, make a counteroffer, or reject the offer. Once your offer is accepted, you’ll go under contract, pay your earnest money deposit into an escrow account, and collaborate closely with your agent, lender, and attorney to ensure that you meet the terms of your contract. This is also when you can schedule a home inspection, and your lender will order a home appraisal.
Usually, it takes a seller 24 two 48 hours or more to respond to your offer. If multiple offers are involved, it may take longer, since the seller will collect all offers over a period of time and review them together to find the best one.
After your offer is accepted and you go under contract, you’ll need to complete your mortgage application, have a professional home inspection done, pay for an appraisal required by the lender, have a title search conducted, and review and sign numerous legal documents before you can assume ownership of the property. Your lender and real estate agent will help you through all of the steps involved.
The bottom line
What happens after you make an offer on a house? A lot – the inspections, the appraisal, the title search, the loan underwriting. But it’s all in the service of achieving your goal, and you don’t have to navigate it alone. Your lender and real estate agent will guide you through each step. And before you know it, you’ll be holding the keys to your new home.