Making an offer on a house—much like a marriage proposal—is equally exciting and anxiety-inducing. After spending quality time browsing listings, hitting up open houses, and obsessively fiddling with mortgage payment calculators, you've finally found the house you want to spend the rest of your life with. You and your real estate agent put together your offer, aiming for the perfect dollar amount and closing terms. Maybe you even included an offer letter to show you're really committed. Your agent submits the offer, but what can you expect next?
Once you submit an offer, one of three things can happen: 1) Your offer is accepted, 2) Your offer is rejected 3) Your offer is countered by the seller.
If your offer is rejected
The seller might decide the amount you're willing to pay is lower than what they're willing to accept and the difference is too wide for a seller to counter your offer. If this happens you can either present a new and higher priced offer or move on to another house.
If your offer is countered
If the seller counters your offer they are usually countering price, terms or both price and terms. This means you are still "in the game" and gives you an opportunity find a point where both you and the seller are happy.
If your offer is accepted
Once you reach the point of an accepted offer, things really get exciting.
1. Get your financing in order. Now is the time to move forward with your lender on the purchase loan. Work with your lender and your Realtor to supply the lender and the banks with any paperwork needed. A copy of the fully executed purchase contract and any counter offers are one of the required documents. Your lender will require an appraisal by a licensed appraiser as part of this process, and will work with you and the Realtors in the transaction to have that paid for and scheduled.
2. Have the home inspected. An inspection isn't a lender requirement, but it is a highly recommended thing to do. Inspections give you the opportunity to "kick the tires" on the house to make sure everything is in working order and key items are in place. Your Realtor will help you make sure the process if fully completed within the contractual deadlines. Depending on what the inspector turns up, you might ask the seller to make some fixes, ask for a concession, or even just walk away.
3. Find homeowners insurance. Almost every lender will require you to have signed up for homeowners insurance before approving your loan. Shop around and don't be afraid to negotiate. You can save money by bundling your homeowners insurance with any other kind of insurance you have, like auto insurance.
4. Move toward closing. While all of this is happening, your lender will be preparing your loan. California is an escrow state and it is escrow's job to make sure everything is in order with the closing documents.
During this period, most of the work happens behind the scenes, with someone on your team—Realtor®, lawyer, lender, title agent—popping up to ask for a document here and there. Your primary job is make sure you have your down payment ready. Don't make any big purchases or take out any loans or open up new credit cards, because that can mess with your credit.
When everybody gives the green light and your loan is approved, it's time to head to the escrow office to sign the final escrow papers. Usually, you'll do a final walk-through of the property with your real estate agent within five days before closing to ensure nothing has been damaged and that any repairs negotiated were completed. Sign on the dotted line, and you're done! Now you can focus all your energy on moving into your new home.