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The home-buying process is very fast-paced. In the current economic climate, there are very low-interest rates on homes, and the real estate market is incredibly competitive in many metropolitan cities for this reason. It can be very exciting when you have the opportunity to go under contract on a house. In this midst of the excitement, it is important that you take the appropriate steps to ensure that the home is secured. In addition, you must ensure that the home that you are investing in is worth the money that it will cost. In this article, we will share five things that you must do shortly after going under contract on a house.
1. Find a Home Insurance Provider
After you go under contract, begin collecting home insurance quotes for the property. Home insurance is important because it verifies how much money you will receive if a tragic accident happens to the property. If the insurance quotes are significantly lower than the selling price of the home, it is important to evaluate the purchase and ensure if it is truly a wise decision for you to make.
2. Schedule Inspections
After you go under contract, you enter into a phase that is commonly referred to as “due diligence.” This process accounts for different circumstances depending on the state that you reside in. During this time, you are able to complete a variety of inspections on the property. These inspections examine the plumbing, appliances, foundation, and many other aspects of the structure. If the inspection exposes any massive damages or unsafe aspects of the space, you can retract your offer.
3. Alter the Offer
Based on what is revealed in the inspections, you may have the option to amend the original contract. If there are major damages or the appraisal comes back at a much lower value, you have the ability to negotiate the purchase price. You cannot simply change your mind about what you are willing to pay for the property; if you have legitimate reasoning to negotiate the price, it is able to be done.
4. Send Your Earnest Payment
As soon as you go under contract, you will send an agreed-upon amount of earnest money to the designated brokerage or legal firm. This money ensures the buyer that you are invested in this property. If the sale falls through, you will get this payment back. If the sale is finalized, the earnest money will be used towards your down payment. An earnest payment typically equals between 1% and 3% of the overall selling price of the property.
5. Schedule an Appraisal
During due diligence, it is important that you schedule an appraisal. An appraisal value takes into consideration the value of the property, house, and location of the home. Based on that, an appraisal is calculated to determine what the property is worth. Hopefully, an appraisal will come back equal to or higher than the price you offered on the home. If your home appraises for a much lower rate, you may want to negotiate your offer.
After going under contract on a home, there are many important steps to take to ensure that you are fully prepared for this investment. Each step helps to ensure that the process will continue to move along smoothly. If you are working with a real estate agent, they will be able to coach you through each barrier to ensure that you are following the appropriate protocol.