Seller, Managing the Transaction

Managing the Transaction 

Legacy Brokers receive extensive training in all areas of real estate and are well-equipped to handle any type of transaction. Whether you are a Buyer, Seller, a first-time or a repeat customer, you can trust our Brokers to offer the best advice, to protect you through the proper legal terms and contract contingencies and to ensure you stay informed and updated during each step of the complex transactional process.

Steps for a Standard Offer and Transaction

Transaction Timeline

Once Buyer and Seller have reached mutual agreement on the terms of an offer, the offer is deemed “accepted.”  All of the timelines outlined in the sales agreement begin the first full business day after both parties have accepted and signed the agreement. A “business day” is considered to be Monday through Friday, with the exception of any state or federally recognized holidays.

1.

Offers Submitted, Received, Reviewed and Selected

When a buyer submits an offer to purchase a property, one of three responses can be expected. The offer can be accepted, countered or rejected. In other words, the seller will either accept the buyers offer as-is, counter the offer with different terms (higher price, longer time-frame, etc), or reject the offer altogether.  Sellers typically respond to offers within 1-2 days, however, when multiple offers are received, the response time can be longer.

2.

Open Escrow & Deposit Earnest Money

Earnest money is a deposit the Buyer puts down with their offer to purchase a house, signaling your “earnest” intention to purchase your home. The title company holds this deposit and it is counted toward the Buyer’s down payment at the close of the transaction. 

Once the Seller has accepted an offer, the first official task is for the Buyer to submit their earnest money to escrow.  The listing broker will “open escrow” by notifying the title company that an offer has been accepted, and will send all the associated sales agreement documents to the title company.  

The standard timeline for an earnest money deposit is three business days from the date the offer was accepted, unless the sales agreement states otherwise.  Earnest money is paid by check to the title company or through electronic funds transfer.  Once the earnest money has been received and processed, both brokers will receive a copy of the check and a confirmation. The earnest money will remain in the secure escrow account until all of the terms of an agreement have been met.

3.

Preliminary Title Report Review

Once an offer is mutually accepted and escrow has been opened the title company will deliver a Preliminary Title Report to all parties involved in the transaction. “A Preliminary Title Report is a dated formal report that sets out in detail the conditions under which a policy of title insurance would be issued on a particular parcel of land. Its sole purpose is to facilitate the issuance of the policy.”

The report includes the matters which would be shown as exceptions in a policy of the title insurance so all parties in the transaction are aware of any records that may need to be cleared prior to the closing of the transaction. 

Those matters shown in the report are: 

  1. The estate or interest covered. 
  2. The record owner of the estate or interest. 
  3. A legal description of the parcel of land covered. 
  4. Requirements and Notes 
  5. The easements, liens, encumbrances and other matters which affect the title to the land at the date and time of the report.

Click Here to be directed to Ticor Title’s “How to Read a Preliminary Title Report”

Once received you’ll have a set number of days based on your mutually accepted sales contract, most commonly 5-10 business days, to review the report and notify the Seller, in writing, of any matters disclosed that are unacceptable. If the property is subject to special items, or if there are issues on the title that could affect homeownership, it’s best to understand them thoroughly before closing.

If, upon receipt, the Report and Documents of Record are not fully understood, the Buyer should contact the title insurance company for further information or seek competent legal advice. The buyer’s and seller’s brokers are not qualified to advise on specific legal or title issues. However, we are happy to help connect you with your title company and/or a qualified professional so your questions can be answered thoroughly.

4.

Buyer Financing

The Buyer must be able to secure and show proof of specific financing from a lender.  This contingency states that in order to enter into a purchase contract, the Buyer must qualify for financing.  It also states that the home they are purchasing must appraise at value.  

Failure of Financing Contingency

If Buyer receives actual notification that any financing contingencies have failed, the Buyer must promptly notify the Seller.  The parties then have 2-5 business days following the day of Seller’s receipt of such notification to determine next steps.  The possible next steps are:

  1. Terminate the transaction by signing a Termination Agreement (OREF-057) or such other similar form as may be provided by escrow.
  2. Reach a written mutual agreement upon such price and terms that will allow the transaction to continue. Neither Seller or Buyer is required to reach such an agreement. 

If neither (a) nor (b) occurs within the time period identified, the transaction automatically terminates and all earnest money is promptly refunded to the Buyer.  Buyer understands that upon termination of the transaction, Seller has the right to immediately place the property back on the market for sale upon any price and terms that the Seller determines. 

Buyer’s Responsibility Regarding Financing

By signing the Sales Agreement, the Buyer is making the following legal representations to the Seller:

  1. Buyer will submit a completed loan application to their lender for purchase of the property no later than 3-5 business days after the date of the mutually signed sales agreement. 
  2. Buyer will complete all necessary paperwork in a timely manner and exercise best efforts (including payment of all application, appraisal and processing fees) needed to obtain the loan.
  3. Buyer will order the lender’s appraisal no later than expiration of the Inspection Contingency Period in Section 10 of the Agreement, or if the Professional Inspection Addendum (OREF-058) is used, the expiration of the Inspection Period.
  4. Buyer has liquid and available funds for the earnest money deposit and down payment sufficient to close the transaction. The Buyer is not relying upon any contingent source of funds (e.g., from loans, gifts, sale or closing of other property, 401K disbursements, etc.), unless outlined in the Sale Agreement.
  5. Buyer authorizes the lender or mortgage broker to provide non-confidential information to the Seller regarding the Buyer’s loan application status.
  6. Buyer agrees to notify Seller if, after signing this Agreement, Buyer substitutes another Lender for any reason. Buyer is not permitted to select a Loan Program different than the one selected in Section 4B of the Sales Agreement, without Seller’s advance written consent.
  7. Buyer agrees to keep Seller informed of all other developments regarding Buyer’s financing and the timing of Closing.

5.

Seller's Property Disclosures

The Seller’s Property Disclosures are used by the Seller to disclose to a Buyer all known adverse material facts related to the physical condition of the property that are not readily observable. It is the Seller’s obligation to disclose these issues, and it is the Buyer’s responsibility to be completely aware of past problems before signing the final documents. Sellers must deliver the property disclosures no later than 5 days after an offer is accepted. If the Sellers fail to do so, the Buyer can terminate the agreement.

Once the property disclosures are delivered to the Buyer, the Buyer has 5 days to review and respond.  In some cases, additional information may need to be requested.  If anything disclosed makes the property undesirable to the Buyer, the Buyer may terminate the transaction and receive a full refund of their earnest money.

Seller Representations

By signing the sales agreement, the Seller attests and agrees to the following representations:

1. The dwelling has operating smoke alarms, smoke detectors and carbon monoxide detectors as required by law prior to the closing date.
2. Seller has no knowledge of any hazardous substances in or about the Property other than substances contained in appliances and equipment. Buyer acknowledges that asbestos commonly exists in insulation, ceilings, floor coverings and other areas in residential housing and may exist in the Property.
3. Seller knows of no material defects in or about the Property.
4. All electrical wiring, heating, cooling, plumbing, irrigation equipment and additional systems and the balance of the Property, including the yard, will be in substantially their present condition at the time Buyer is entitled to possession.
5. Seller has no notice of any liens or assessments to be levied against the Property.

6. Seller has no notice from any governmental agency of any violation of law relating to the Property.
7. Seller is not a “foreign person” under the Foreign Investment in Real Property Tax Act (“FIRPTA”) as defined in this Agreement.
8. Seller knows of no material discrepancies between visible lines of possession and use (such as existing fences, hedges, landscaping, structures, driveways, and other such improvements) currently existing on the Property and the legal description of the Property.
9. Seller will keep the Property fully insured through Closing.
10. Seller agrees to promptly notify Buyer if, prior to Closing, Seller receives actual notice of any event or condition that could result in making any previously disclosed material information relating to the Property substantially misleading or incorrect.

6.

Inspections

Inspection Contingency Period

Once an offer has been accepted and signed by both parties, the Buyer typically has 10-12 business days to complete all inspections and negotiate any repairs with the Seller. This is known as the inspection period. (Refer to your sales agreement for the exact timeline.) If a Buyer is dissatisfied with the condition of the home in any way, they can terminate the transaction at any time during this 10-12 day period. In order to terminate, the Buyer must submit their unconditional disapproval of the property based on the findings of the inspection report. Once the unconditional disapproval is signed and submitted, all earnest money deposits are to be promptly refunded, and the transaction officially terminated.  If an unconditional disapproval is not submitted by 5 pm of the final day of the inspection period, the Buyer is considered to have accepted the condition of the property.

7.

Negotiate and Complete Repairs

After reviewing the inspection report, the Buyer’s broker will communicate any concerns the Buyer may have along with the findings. Bids are often obtained for necessary repairs.  These repairs will be listed in a document known as a ‘repair addendum’ and submitted to the Seller. Buyer and Seller will then, through the mediation of their respective brokers, negotiate the necessity of and responsibility for these repairs. If Buyer and Seller cannot negotiate a repair agreement prior to the end of the inspection period, it may be necessary to extend the inspection period with an additional written addendum. 

Completion Date for Repairs/Corrective Action

A mandatory completion date for any negotiated repairs will be identified in the repair addendum.  The Buyer will then have 2-5 days to complete a re-inspection, ensuring all repair work is completed and satisfactory. The repair addendum also states that all repairs requiring the use of a contractor (e.g., any electrical, HVAC, plumbing, or similar specialty work) are to be performed by Oregon licensed and bonded contractors in accordance with all applicable laws, codes and ordinances.  

8.

Appraisal

A home appraisal is an unbiased estimate of the fair market value of a home. The bank or lender will order an appraisal to be completed by a licensed appraiser and this will determine the value of a property. More importantly, it will determine whether the home’s contract price is appropriate, given the home’s condition, location and features.  Lenders want to ensure that homeowners are not over-borrowing for a property, since the home serves as collateral for the loan.

The result of the appraisal will determine how much a lender is willing to give a buyer to purchase a property. The cost for the appraisal is typically around $550 and is paid for by the buyer.  Ordering an appraisal can take several weeks and it is often advised to order an appraisal as soon as the inspection contingency has been satisfied. If the buyer waits too long to order an inspection, the date of closing can be delayed. Your broker will work closely with your lender to ensure proper timing for the appraisal.

9.

Final Buyer Walk Through

Final Walkthrough and Verification of Repairs

Once the Buyer’s broker receives notification that all repairs have been completed, the Buyer is able to walk through and verify the repairs and the condition of the house. Depending on the extent of the repairs, Buyers may opt to do a re-inspection with the original inspector for a fee. All electrical wiring, heating, cooling, plumbing and irrigation as well as the overall state of the structures and the land, must remain in similar condition until the Buyer takes possession of the property.

10.

Close Escrow, Final Loan Approval & Signing

The Closing Disclosure

Pursuant to the federal TILA-RESPA Integrated Disclosure Rules (“TRID”), Buyer and Seller will each receive a federally-required document called a “Closing Disclosure”, which, among other things, summarizes each party’s closing costs. TRID requires that the Closing Disclosure be received by a residential loan borrower at least three business days prior to “consummation” of the transaction, which in most cases in Oregon will be the date on which Buyer signs the loan documents. Under certain circumstances, a change to the Closing Disclosure late in the transaction could result in a delay in Closing to comply with the three business day rule. Such a delay beyond the Closing Deadline could result in termination of the transaction unless Seller and Buyer mutually agree to extend it.

Close Escrow, Final Loan Approval, & Signing

Once all documents, agreements and addendums are delivered to the lender, the final loan approval takes place. The lender will then finalize the loan package and deliver all the loan documents to escrow/title company. When the title company receives the loan documents, appointments to sign the final papers are scheduled for both Buyer and Seller.  Signing is done at the title company with the Escrow Officer handling the transaction.  Buyers must bring their ID with them, and have arranged for the delivery of all funds needed for closing.  Depending on the time of day the signing appointment takes place, funding and recording typically take place later in the day, or the following business day.  Once recording/funding occur, Buyer may take possession of the property as per the contract.

11.

Keys & Move-In

After all the paperwork has been signed, recording has taken place and funding dispersed, the Seller will deliver possession of the property to the Buyer.  The pick up or delivery of keys are coordinated by the Real Estate Brokers involved in the transaction.  

12.

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