Timeline: Contract to Close
What Is A Day?
In real estate contracts, days are tracked using calendar days. Simply put, they are just days. This includes weekends and holidays; no days are skipped.
The Effective Date (Day 0):
The effective date is the date when all parties have signed the Sales Contract or Counter Offer Addendum. Congratulations, your offer has now been accepted or you have accepted an offer on your home!
The effective date is the starting point for all other time periods specified in the contract. It is day zero.
Earnest Money Deposit (Days 1 to 3):
The earnest money deposit (EMD) is the down payment on the down payment. Earnest money is a cash deposit the buyer makes once their offer is accepted. The EMD is kept by the Title Company overseeing the legal transfer of the property and is part of the down payment. EMD is used as collateral for the seller; larger EMD payments show that the buyer is more serious.
If the buyer defaults on the sales contract they usually forfeit the EMD to the seller. If the seller defaults on contract the EMD is returned to the buyer. The EMD is returned to the buyer if the contract is cancelled using one of the methods specified in the contact.
Inspection Period (Days 1 to 10):
Period where the buyer can conduct a home inspection. The home inspection involves general and specialized technicians that verify the condition of the property. During the inspection period the buyer must submit an Inspection Notice stating whether they plan to accept the property as-is or request repairs be made.
Resolution of Unacceptable Conditions (0 to 5 Days After Inspection Period):
Only required if the buyer requests the seller make repairs to the property or reduce the sales price. The buyer must give the seller all inspection reports. The buyer and seller can negotiate the resolution. If an agreeable resolution cannot be reach either party may cancel the contract after the 5-day negotiation period.
Loan Approval (45 Days, or up to 5 Days of Closing):
During this period a buyer seeking a mortgage must get a loan commitment from a lender. This includes lender qualification, lender required appraisal, and underwriting.
Appraisal (10 Days – May Vary):
Cash Buyer: The buyer can get an appraisal if they wish. The appraisal period will usually occur during the inspection period, but the buyer can request any length of appraisal period in their offer.
Mortgage Buyer: The lender will likely require a property appraisal after inspections are completed. The lender is willing to loan up to the appraisal value. If the property appraises for less than the offer price the buyer must pay the difference, or the sale price must be renegotiated.
Appraisal Negotiation Period (5 Days):
If the property appraised for less than the offer price the buyer can request the price be renegotiated. The buyer must provide the appraisal report. After 5 days if no agreement has been reached either party can cancel the contract.
Final Walkthrough (Right Before Closing):
Before going to closing, the buyer will tour the property one last time. The purpose of the walkthrough is to ensure all requested repairs have been completed and verify the condition of the property. If a problem is found this is the last chance to resolve it or cancel the contract. If closing occurs before an issue is detected the only recourse is the court system ($$$). The final walkthrough should occur 1 to 3 days before closing.
Closing and Possession:
The big day! At closing all legal documents related to the transfer of the property will be signed and final payments will be completed. Closing occurs at the Title Company’s office. Possession—when the buyer can occupy the property—is normally the same day as closing.
