A real estate contract is a binding and very real legal document that can have very real repercussions if not executed correctly. The best way to avoid this issue is to make sure you don’t miss important contract deadlines . . . and there are many deadline hurdles to jump in a real estate contract to ensure it is fulfilled.
Here are sneaky deadlines to make note of and make sure you don’t miss!
Seller’s Disclosure
This eight page addendum is used for the sellers to disclose any prior information they have about the condition of the home. The disclosure of material facts is required by both Kansas and Missouri state law.
Things that are usually covered here are age of the roof, HVAC and AC, also any past issues with foundation or termites, lead-based paint, etc..
This does not necessarily need to be completed when the home is officially listed with a broker, but it MUST be filled out before a legal offer from a buyer can be accepted. I would suggest getting this done ASAP so you don’t hold off any incoming offers.
Due Diligence or Inspection Period
This 10-15 day period is when home buyers are encouraged to do their due diligence on the property. Most contracts in Kansas City give 10 days for this period, unless you request more. Before your inspection period is over, you should talk with neighbors, gather any information from the county and city about future projects in the area that might affect the property, and have a professional inspector write up a full report.
If you fail to do your own investigating with a team of professionals of your choosing, then you will end up being contractually obligated to buy the home “as is”. You will miss your opportunity to reopen negotiations and get some issues that popped up in your inspection report fixed, and possibly on the seller’s dime. You will also give up the option to withdraw your offer if you miss the 10-15 day deadline.
Appraisal & Financing
Once you’ve moved on from inspection and renegotiations, your lender will order an appraisal to assess the value of the home and begin the process of documenting and underwriting the home loan. You typically have about 30 days (the same amount of time you have to confirm a loan commitment from your lender) to get an appraisal on the home.
If you home appraises you get to continue the process. If the home does not appraise, the buyer must notify the seller, and then the seller has seven days to seek reconsideration of value of the property. If the revaluation still comes in under the accepted offer price, the buyer and seller have five days to agree upon an acceptable purchase price in writing. If no agreement is made within that time, either party can cancel the contract with written notice.
Lastly, if you are a cash buyer, you must give written verification that you have the funds necessary to purchase five days prior to closing.
Entering Escrow Prior to Closing Date
Between the time of the home appraisal / funding confirmation and closing date (this time can vary contract to contract) the buyer must deliver into escrow all the needed documents (notes, mortgage, deeds of trusts, etc.) and funds necessary to satisfy the contractual obligations.
If the buyer can not enter into escrow before the agreed upon closing date, the contract can not be fulfilled and the contract will likely fall apart. In the case you know you will have trouble entering escrow prior to closing, you will need to file an extension and have all parties sign.
Utilities
Lastly, sellers must continue to keep utilities and water on in the home until the date of closing, even if they have already vacated the property. The home and property are still the seller’s responsibility until all closing signatures have been documented.
Buyers must also contact their local utility and water companies to ensure that these will be switched over in their names on the date of closing.
If you get through the entire home buying or selling process without missing these deadlines, you’re in the clear! All that’s left to do is exchange money for keys and live happily ever after . . . at least that’s the goal.
Now you see how complicated real estate contracts can be and why it’s so important to work with a Realtor you trust to walk you through the process one step at a time. If you want the best results, you have to work with the best.
Call me today at 913-725-8827 to help you find your dream home or sell your home. I’ll be there for you from start to finish, explaining the process, ensuring you never miss a deadline and getting your contract to the closing table!