After Your Offer is Accepted: A General Real Estate Timeline and Escrow Guide for Home Buyers in Sacramento, California
Your offer has been accepted by the sellers, but you don't get the keys just yet. It can take weeks and even months before you can move into your new home, and a lot can happen "in escrow". The following is a general timeline of events in a hypothetical 30-day real estate transaction.
On the date the seller’s accept and return your offer the timeline for the contract officially begins, and escrow will be opened with a title company. Escrow is an independent 3rd party to the transaction who can only follow the terms that are laid out in the purchase contract and supplemental documentation. (The word escrow is also used to refer to the period of time between the acceptance of an offer and the closing of the transaction).
The day your offer is accepted is day 0 of the timeline. Your timeline may vary slightly depending on the terms of your contract.
On or before day 3 of the timeline, you or your agent on your behalf must deliver your earnest money deposit (EMD) to the title company. The earnest money deposit is small percentage of the purchase price (often around 1%) which is held in an escrow account. This deposit shows the seller that you are a serious buyer who intends to purchase the property. If you choose to cancel the transaction after a specified period of time, the seller may be permitted to keep your earnest money deposit.
Usually around day 5 of the timeline, the lender will order an appraisal for property to determine if the property value is consistent with the proposed purchase price in the contract.
The first 17 days of the timeline are part of the inspection period. During this time, you and the experts you hire should conduct inspections of property. You can hire a licensed home inspector to come out and survey the property and grounds and give you a report on all findings. A good home inspector will visually inspect the house and property and make recommendations for specialized inspections—such as roof, HVAC, chimney, pest, etc.--if necessary. Complete inspections as soon as possible in case you want to ask the seller to make repairs or credit you money for problems found during the inspection period.
Days 5-12: Review seller’s disclosures about the property. The seller is required to disclose all material facts relating to the property. You will sign a variety of documents which provide information about natural hazards, property taxes, lead paint, carbon monoxide detectors, permits, upgrades made to the house and anything else which may influence your decision to purchase or not purchase the property.
Day 14: Request repairs from seller (if necessary). Submit request for repairs before the inspection period is over so that you can negotiate repairs with seller before you sign off on your inspection contingency.
Day 17: Remove loan contingency and inspection contingency. Your purchase contract guarantees you a specific amount of time (usually 17 days) to inspect the property and get your loan together. If you are not able to obtain a loan, or if you find a serious problem during your inspections, you can cancel the contract and have your earnest money deposit returned.
However, after the official inspection period, you must remove the inspection contingency. This means you are telling the seller in writing that you are satisfied with the results of the inspection and wish to move forward with the transaction. Should you choose to cancel the contract after removing this contingency, you are at risk for losing your earnest money deposit. The same scenario is true for removing the loan contingency.
Day 25: Sign docs at Title Company. Over the last few weeks, your lender and the title company have been amassing a huge portfolio of documents which relate to your loan and the property you are trying to purchase. When you go to your signing appointment at the title company, you must bring the following items: government issued photo ID, spouse and cash to close. Cash to close is comprised of various fees referred to as closing costs and your down payment funds. Cash to close should be in the form of a cashier’s check or wire transfer.
You should also conduct your final walk-though. Make sure the property is in the condition it was in when you first made the offer or better condition if the sellers have agreed to do repairs.
Day 30: Funding and recording. Once all the paperwork you signed at the title company is submitted to your lender, the lender will fund your loan. The bank will wire the money directly into an escrow account and funds will be dispersed according to the terms of the contract.
Next the change of ownership will be recorded by the county recorder’s office. Once we have confirmation that the property has been recorded, you get the keys.
Congratulations, you are now a homeowner!