Understanding the real estate process can be challenging. There are numerous moving parts, and no one transaction is ever the same, which means you must constantly learn new material. To truly become a good agent, you must learn the real estate purchase deadlines, what they mean, and the actions you need to take before each one.
Most Common Deadlines in a Real Estate Purchase Contract
Below, we break down the most common buyer-side deadlines in a real estate purchase contract and why each is important.
Earnest Money Deadline
The earnest money deadline is 3 days after the seller accepts the offer. Earnest money is considered a “good faith deposit” meant to show that the buyer is serious about purchasing the home. While earnest money isn’t required, it’s typically considered relatively standard practice, especially in a competitive housing market.
To fulfill this deadline, it is extremely important that the earnest money check is given to either your real estate company or the title company you’re working with. It is also important to remember to send the earnest money receipt to the seller’s agent so everyone can acknowledge that the money, which acts as a hold on the property, was turned in on time so that the contract doesn’t default.
Seller’s Disclosure Deadline
The seller’s disclosure deadline is the first deadline on your real estate purchase contract. The deadline for this disclosure varies, but will generally be required before the signing of the real estate contract. This important document describes the condition of the property and includes a checklist of specific issues that the homeowner must disclose and questions they must answer about the property’s condition, as well as additional details about appliances that will be included in the sale.
Depending on who you are representing, different actions need to take place to meet this deadline. If you are representing the sellers, you should have them complete the disclosures before you put the house on the market. Doing this early avoids any conflict with the buyer’s agent and shows that you are proactive. Making sure your client fills out the disclosures properly and honestly is essential to avoid any problems that you might encounter with the buyers if any misinformation is given.
If You are representing the buyer, you should review the disclosures with them.f you notice any striking issues, you should address them with the seller’s agent. Make sure you also send over the Seller Property Disclosures (SPCD) to your client’s home inspector so when they inspect the home they can go over anything that the seller disclosed on the paperwork.
Due Diligence Deadline
In real estate, due diligence is the time in which you can conduct inspections. The due diligence deadline differs from deal to deal, but is normally within 10-14 days of the date of the accepted offer.However, during a competitive market, the time frame can be a lot shorter.
If you have a tight deadline, it’s important to send an inspector out to your property right after receiving the seller’s disclosures. The inspection report may take 24 hours to come back to you,make sure you allow time to review the inspection report and to talk with your clients and the inspector to see what items you may want to negotiate with the seller. An addendum will need to be created as soon as you determine any items you will be asking the seller to fix or replace, or you may determine not to request any updates and will instead amend the offered price for the home. The addendum must be turned in before the due diligence deadline. This deadline also gives your buyers the chance to back out of the transaction if certain contingencies aren’t met.
F&A (Finance and Appraisal) Deadline
The finance and appraisal deadline is a waiting game—the lender takes care of ordering the appraisal and making sure they have all the financial documents they need from your clients. It’s important that you check in with your lender right after the due diligence deadline to let them know that the deadline has been met and you’re still moving forward with the deal. When the appraisal comes back, the appraiser will either match the sale price, the appraisal will come in low, or the home will appraise for more than what is being asked. If the home appraises for more than what is being offered, this is something you will NOT want to disclose with the sellers—it’s a bonus for your buyers.
Settlement Deadline
Congrats! You’ve made it to the settlement deadline, hopefully without too many bumps along the way. But as we stated in the first paragraph, not every transaction will be a smooth one. When you first go under contract you will have your client choose a title company. Hopefully, you have developed relationships with title agents and can help steer your client in the right direction, as you will want someone you like and trust. You will set up the closing with your title company and make sure that all is good to go with your lender and that your clients are eligible to sign. You will set up the signing with the title agency. As soon as both parties sign the funds are wired to the title company. The funds cannot be written out in a check form or brought in with cash—they have to be wired from your bank straight to the title company. Many newer agents forget to tell their clients this, and if this happens, it can cause a delay in the closing. Once you’re recorded by the county, the home officially belongs to your clients!
Final Thoughts
A real estate contract can be confusing for both buyers and sellers, especially for first-timers. There is plenty of jargon that many may not be familiar with, and many deadlines are stipulated that must be met. It is extremely important that your client understands what each deadline means, so sitting them down before the process begins, as well as going over a deadline before the deadline date is due. Being overly communicative is the best approach when working with your client. Failure to meet these deadlines can result in a dead deal, which is why it’s essential that all necessary parties do their due diligence to meet these milestones.
This article is intended for informational purposes only.
This article is meant for general informational purposes and is not intended to constitute financial advice to any person. The information within should not be used for financial investment decisions or any other financial purposes, and to seek independent financial advice from an appropriate professional. The author does not give any warranty as to the accuracy of any information in the paper to any person for purposes of financial decisions.
© Weekly Real Estate News. This article may be used in marketing efforts only if full and clear credit is given to Weekly Real Estate News and a link is provided to the original article.
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