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This is Part Two of the two part series focusing on the terms you’ll want to know when buying a home in the Denver Metro market. If you haven’t already, click over and read Part One before continuing below. If you’ve already read Part One, read on and let's learn about the terms you’ll want to know once under contract on your Denver Metro area home!
Once your offer is accepted, the real estate term for this is called under contract. At this point, the seller can’t accept any other offers except a back-up offer. A back-up offer comes into play if you terminate. At the time of termination, the backup offer would then be the main offer without the Seller having to go back on the open market. That contract to buy the home would move forward.
Once under contract, the buyer will need to deposit earnest money. Earnest Money is an amount determined by the purchase contract that you deposit with a 3rd party to the contract, such as the Title Company or Listing Agent’s real estate firm. This money shows that you are serious about purchasing the home you are under contract on. There are deadlines throughout the contract (for example the date that the buyer needs to object to the inspection) that the buyer can legally terminate on and still get their earnest money back. However, if the Buyer defaults on the contract this money would be released to the Sellers.
The next step is usually an inspection. In most cases, TK Homes recommends a sewer scope, a radon test and a general home inspection. We recommend these tests because when negotiating, we want to make sure we understand what problems exist. The sewer scope will look at the sewer line to see if there are any possible cracks or blockages and whether or not a cleaning or even replacement is recommended. The radon test is important because radon at high levels can cause cancer, and it is important to have radon results be at 3.9 or below. In a general home inspection, the inspector will check all of the major systems in your home, such as HVAC, the hot water heater, your fireplace, the roof, etc. for safety concerns and repairs. They will also check your outlets, sinks, all your appliances, etc. It is important to have this inspection to know what needs to be repaired, but the inspector can also educate you about your home, like where your water shut-off valve is and your electrical panel.
After your inspections, TK Homes will help generate an Inspection Objection. The Inspection Objection is the formal document used to tell the Sellers what items the Buyer wants them to fix/replace prior to Closing. It is important to remember that a Buyer can ask the seller to do whatever they want in this Inspection Objection, but it does not mean the Seller has to make the repairs/replacements. Once all parties agree what the Sellers will do on the Inspection Objection an Inspection Resolution will be executed by all parties. The Inspection Resolution is the legal and binding document that holds the Sellers responsible for repairing/replacing whatever is mentioned on this document.
Once you get past inspection, the appraisal (learn more about appraisals here) and your other deadlines, you will need to do a final walk-through. This means that you will walk through the home you are buying one last time to make sure any repairs you asked to be completed after the inspection were actually completed. You will also look at the overall condition of the property to see if it is in the same condition it was previously when going under contract.
The last and most fun part of the process is the closing day. The closing day is the day that you will come to the title company to sign the papers to purchase your home. On that day, you will need to bring your driver’s license and a cashier’s check in the amount that your lender told you to bring. Not only will you sign the papers to purchase your home, but you will get the keys to your new home. All that is left to do is to celebrate!
Now that you are aware of what all of these real estate terms mean, you can sit back and enjoy the process of finding a home without the fear of misunderstanding along the way. At TK Homes we are here to help, so please let us know if you have any questions. As clients, you are our top priority, we realize that buying a home is possibly the biggest purchase you will make, so we are there to assist you every step of the way. We look forward to working with you!
~ Written by TK Homes REALTOR® Mary Smith
**For a complete, step by step guide on buying a home, download our First Time Buyer’s Guide.**
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