I Have a House Under Contract! Now what?
You’ve focused all your energy on finding the right home or the right deal and winning the contract — and you’ve done it! What happens next? Take a look at this timeline that details the typical process for residential properties under contract in Texas.
Congratulations on securing a contract!!
This is a timeline of typical critical dates to remember and steps to take while your contract is pending. This is not intended as legal advice. We recommend you read the contract and hire an attorney to answer any legal questions.
The information provided herein may include errors and omissions. Please reference the contract directly for the most accurate information.
Hopefully, this timeline helps you feel more confident about the contract to close process. As always, I'm here to answer any questions that arise. Feel free to call me or text me any time at 512-900-4987 or email me at lynn@bramlettpartners.com
Immediately and During Option Period
Day 0-3
Talk to your lender: Talk to your lender, send them the contract, verify and lock in your interest rate, ask any questions. And make sure to get them any documents they ask for ASAP.
Earnest Money & Option Fee Due on Day 3: Within 3 days after the effective date of the contract, Buyer must deliver earnest money and option fee to the Title Company. When counting days, the day the contract is executed is day 0. If the last day to deliver the earnest money falls on a Saturday, Sunday, or legal holiday, the time to deliver the earnest money is extended until the end of the next day that is not a Saturday, Sunday, or legal holiday. The Title Company should complete the receipt on page 10 of the contract once the earnest money is received.
Schedule an Inspection: Get a general inspection of the home. Inspections can be scary! All homes, even brand new construction, will have issues. It’s important to prepare yourself and know what’s normal and what’s cause for concern. Check out this guide on common inspection issues and costs
Find Insurance: Evaluate home owners insurance options during your option period to be sure the home is insurable. Some homes with a hefty claim history be difficult for obtaining homeowners insurance. You don’t need to choose a policy at this stage, but you should get quotes to have a general idea of insurance costs.
Survey & T-47 Affidavit Due Date: The date by which Seller is required to provide a copy of the survey & T-47 affidavit to buyer. This could be an existing survey or a new survey. Existing surveys are usually provided within a few days while new surveys take longer (15-20+ days). If Seller fails to furnish the existing survey or affidavit within the time prescribed, Buyer shall obtain a new survey at seller's expense no later than 3 days prior to the closing date. If the existing survey or affidavit is not acceptable to the title company or buyer's lender, buyer shall obtain a new survey no later than 3 days prior to the closing date. Cost of the survey may be either the buyer's or seller's expense, whatever was negotiated in the contract.
Day 4-7
Option Period Expiration: Your option period is typically coming to an end between day 4 and 7 of your contract period. It’s time to talk to the seller about any needed repairs or credits based on inspection findings. Notices must be given by 5 p.m. on the date of expiration of the termination option period. It's important to wrap up all negotiations well ahead of this deadline so all parties can sign paperwork by the cutoff.
Day 10-20
Receive Your Title Commitment: Start asking the title company for your copy of the title commitment (you may get it during the option period, but it should be ready no later than 20 days after the contract was received by the title company). Once the title commitment is received, I strongly recommend that you have an attorney review the contract, title commitment, survey, and T-47 affidavit. They can help identify any points of concern that may otherwise be overlooked. Don't underestimate the importance of this recommendation. This may be one of the biggest purchases of your life, and you can protect yourself from significant liability by having a trained professional review the paperwork. Please ask me for my attorney recommendations.
Three-10 Days after Title Commitment Received Title Objections Due Date: Buyer may object in writing to defects, exceptions, or encumbrances to title disclosed on the survey or title commitment (with a few exceptions) which prohibit the use outlined in your contract (usually residential use). Buyer must object the earlier of the Closing Date or the number of days negotiated in the contract (3-10 days is fairly common) after buyer receives the Commitment, exception documents, and the survey.
Appraisal - If you are using a lender, your lender will likely require an independent appraisal. If you are a cash buyer, you have the option to order your own appraisal. This is a good idea but not required. If you opt not to get an appraisal, make sure that your agent provides you with a comparative market analysis or CMA. I provide every buyer with a CMA before they make any offer.
Choose Home Warranty Coverage: Set up home warranty coverage (RESIDENTIAL SERVICE CONTRACT PAR 7H): The title company will need you to specify the home warranty company and the specific home warranty package that you have chosen BEFORE closing. The closing does not fund until this is done. If the cost of the home warranty package is more than what the seller has agreed to pay, the buyer will pay the difference to the title company.
Some providers to consider:Fidelity National Home Warranty
American Home Shield
Home Warranty of America
First American
Old Republic
Financing Contingency Expiration: The financing addendum provides the buyer time to secure buyer approval for financing. If buyer approval can not be secured during the negotiated timeframe of the financing addendum, then the buyer can terminate the contract and receive the earnest money back. Buyer approval will be deemed to have been obtained when (i) the terms of the loan(s) described in the financing addendum are available and (ii) lender determines that buyer has satisfied all of Lender's requirements related to buyer's assets, income and credit history. Buyer approval is not to be mistaken for full loan approval, which is sometimes secured just prior to the closing date.
Homeowners' Association (HOA) Documents Due Date: If there is a homeowners' association then there should be an "Addendum for Property Subject to Mandatory Membership in a Property Owners Association" in the contract requiring the Seller to provide Subdivision Information to the Buyer within a timeframe — often 10-15 days from the effective date of the contract. This includes any document that governs the establishment, maintenance, or operation of a subdivision, including, but not limited to, restrictions, bylaws, rules and regulations, and a resale certificate from a property owners' association. These documents must be made available to you by the property owners' association or the association's agent on your request. Buyer may terminate the contract within 3 days after Buyer receives the subdivision Information or prior to closing, whichever occurs first, and the earnest money will be refunded to Buyer. If Buyer does not receive the homeowners' association information then Buyer's sole remedy is to terminate the contract at any time prior to closing and the earnest money will be refunded to Buyer. The association addendum to the contract allows Buyer and Seller to negotiate how much the Buyer shall pay toward all Association fees or other charges associated with the transfer of the Property.
Prepare Cash for Closing: Prepare any required funds for closing. If you are required to “bring cash to closing," the amount of cash will be specified on the closing statement. DO NOT BRING ACTUAL CASH to the closing; instead wire the money (ideal) or bring a cashier’s check. (If you are using the funds from the sale of your previous home to purchase a home, you need to work out the details with your bank before closing.) Beware that any large bank deposit you make from the sale of your home can be held for up to 7+ days by your bank. Talk to your bank and plan accordingly to avoid problems at closing; most managers have the ability to release the hold on the funds under certain conditions.
*BEWARE OF FRAUD!
Thieves are hacking into email accounts — sometimes creating an email account that appears to come from the title agent — and giving buyers the wrong account for their down payment or the cash payment for the house. Call the title company to be sure you send your funds to the legitimate account.
3-5 Days Before Closing
Set Up Your Utilities: Initiate utilities services in your name: Be sure that you have called the utility companies to set up services in your name starting on closing day. If there is a leaseback, the seller/tenant should pay to maintain utilities until the last day of the leaseback.
Schedule Final Walkthrough: Arrange a final walkthrough with your buyer agent. This is when you will check to make sure all the inspections items are completed, nothing major has been broken, and that the home is reasonably clean.
Make Plans for Transferring Keys: Arrange the transfer of keys, codes, and warranty manuals (I help you with this!). The purchase is not complete until all of the closing documents are signed and the deal is "funded" or the cash is actually transferred by the lender to the title company. Sometimes there is a delay between signing and funding, and some sellers will not release keys until funding. Be prepared that you might not receive keys immediately.
1-2 Days Before Closing
Get Closing Statement: Get a copy of your closing statement and review it for accuracy. This details all costs associated with the purchase, including purchase price, all fees, and any cash necessary at closing. You should receive this a few days before closing. Be sure to ask your lender when the closing paperwork will be received by the title company. Once the title company has received the closing paperwork, they will be able to issue your closing statement. Contact your title agent with any questions or ask your REALTOR®.
Wire Funds or Get Cashier's Check: Have your closing funds wired to the title company or get a cashier's check made out to the title company. Title companies do not accept personal checks.
CLOSING DAY!!
Closing: The closing of the sale will be on or before the date specified in paragraph 9 of the contract or within 7 days after objections made under Paragraph 6D have been cured or waived, whichever date is later. If either party fails to close the sale by the closing date, the non-defaulting party may exercise the remedies contained in Paragraph 15 of the contract.
Deal Funds: Get your keys!!
After closing, before Feb. 1: File Homestead Exemption