Email Congratulations...
You Are Under Contract!
These Are The Typical Next Steps Before You Close
Unless Otherwise Stated In the Purchase Agreement, Time Periods/Days Begin The Day After Acceptance Of The Purchase Agreement. Note: If There Is A First Right Contingency On The Sale Of A Property Then, Except For Earnest Money, Time Periods Start On Removal Of The 1st Right Contingency.
WHAT'S A REAL ESTATE GET OUT OF JAIL FREE CARD
The "Get Out Of Jail Free Card" is a from the board game Monopoly for a card that lets you escape jail, but it's also an idiom for anything that saves you from trouble.
When Selling a property, there are several contingencies where in theory a Buyer could walk away from the transaction with their Earnest Money in hand! Four of the most common contingencies or “Get Out Of Jail Free Cards” include Financing, Appraisal, HOA Requirements & Inspection
Mitch emphasizes the phrase “in theory” because when a transaction terminates, a mutual release is typically required. That release specifies how the earnest money will be handled—whether it is returned to the Buyer, retained by the Seller, or divided between the parties. Since agents cannot force clients to sign a mutual release, disagreements over what are actual defects and how the earnest money should be distributed may result in litigation, making outcomes difficult to predict.
It is worth noting that Indiana courts often tend to favor Buyers in Earnest Money disputes. Buyers usually incur inspection and appraisal costs, while Sellers can often resell the property. As a result, courts may find it difficult for Sellers to demonstrate financial harm caused by a failed transaction. Still, it's impossible to predict with certainty, how a court will rule!
Buyers Will Need To Let Their Agent Know Right Away How They Want To Pay The Earnest Money. The Three Most Common Ways Are Listed Below. They May Also Be Able To Do A Wire Transfer.
Today Most Brokerages Accept Earnest Money Payments Electronically Using An App Or Online
Electronic/Digital: This is usually the easiest way to deliver the earnest money to the Escrow Holder which typically is the Listing Agent's Brokerage. These electronic payment methods typically connect directly to the Buyer's bank account just like they are logging in to their account to pay bills or check the balance of an account. These Services typically have a one time charge of $20-$30. When Mitch is the escrow holder Mitch Uses the Earnnest App which changes $24.00 and the Earnest Money can be paid using www.PayEMhere.com
Every Brokerage Will Accept A Personal Check To Pay The Earnest Money
Personal Check: The check is payable to the Escrow Holder which is typically the Listing Brokerage. On the memo/note line of the check Buyers should write Earnest Money followed by the Property's Address. The Earnest Money check needs to be delivered to the Escrow Holder. Most times there is a locked/secure mailbox that can be accessed 24/7 from outside the office of the Escrow Holder. Mitch asks the Buyer's Agents to please text a copy of the Earnest Money check before the check is dropped off.
Note: If Buyers should be told that if they need to transfer funds between accounts, then they should do that online ASAP since the check could be deposited remotely as early as the same or next business day.
If Buyers Have Enough Time Before The Earnest Money Delivery Deadline, To Visit The Bank, Every Brokerage Will Also Accept A Bank Issued Check To Pay The Earnest Money,
Bank Issued Check (Certified or Cashier's): If Buyers don't have paper checks, and they don't want to use the electronic app to pay the Earnest Money then Buyers can also use either a Cashier's or certified Check, The check is payable to the Escrow Holder which again is typically the Listing Brokerage. On the memo/note line of the check Buyers should write Earnest Money followed by the Property's Address. Like Paper Personal Checks, These Bank Issued Earnest Money check need to be delivered to the Escrow Holder. Most times there is a locked/secure mailbox that can be accessed 24/7 from outside the office of the Escrow Holder
Although The Least Common Way To Pay Earnest Money, Some Brokerages May Allow For A Wire Transfer
Wire Transfer: If Buyers would like to pay the Earnest Money using a Wire Transfer, then their Buyer's Agent can let Mitch Know and he can share the wire account info. Beyond any fees charged by the Buyer's bank to send the wire, ToHelpUMove Trust Services, like many brokerages, charges Buyers an inbound wire fee of $25. Note: The other downside to sending a wire might be the bank's business hours if the Buyers cannot initiate the wire online. Lastly, some financial institutions, especially non brick and mortar operations and/or investment brokerages, can take 2-3 days to initiate and process the wire transfer which could mean the Wire is not received in a timely way.
This Can Typically Be Paid Electronically, With A Personal Or Bank Check
You will Find The Amount Of The Earnest Money, Who The Escrow Holder Is, And The Timeline For Delivery On Lines 39 to 42 Of The Purchase Agreement. NOTE: Be sure To confirm the Earnest Money Terms were not changed as part of any counter offer(s).
After The Buyers Accept A Purchase Agreement On Their Contingent Property, They Must Notify You Using The REMOVAL OF CONTINGENCY AMENDMENT.
The Buyers, agree to remove this contingency when a Purchase Agreement is accepted on their Contingent Property, which is typically their current home. When the contingency is removed, due to the Buyer's acceptance of a Purchase Agreement on the Contingent Property, the Purchase Agreement on your Property is still contingent upon the closing of the Contingent Property. However, the timeline for the Buyers to close on the your Home, unless changed by an amendment to the PA, is as indicated in the accepted Purchase Agreement.
So, if the Buyer's offer on the Contingent Property will not close within the timeline specified in your Purchase Agreement, than before the Buyers accept the offer on their current property, they should FIRST have the you, agree to modify the timeline for closing on your property to support the closing on their Contingent Property. Either way, once the Buyers accept and offer on the Contingent Property, the Buyers need to notify you, as the Seller's of their New Home, that they have accepted an offer on their Contingent Property.
If Buyers remove the contingency on the your Property, after accepting a Purchase Agreement on their Contingent Property, then the transaction on your Property will proceed according to the terms and timelines of your Purchase Agreement. This includes the time to close on your Purchase Agreement. With the exception of delivery of the Earnest Money, all remaining time conditions in your Purchase Agreement, shall begin to run upon removal of the contingency. Should the transaction on the Buyer's Contingent Property not close, then the Purchase Agreement on your Property is null and void and the earnest money shall be disbursed according to a Mutual Release Agreement which is almost always returned to the Buyers.
This Is A Less Common Contingency
A Home Sale or “First Right” Contingency, That You May Be Willing To Accept In A Balanced Or Buyer’s Market, Will Be Indicated On Lines 100 to 108 Of The Purchase Agreement And In The Corresponding Addendum to Purchase Agreement. You Can Learn More About First-Right Contingencies Here.
Buyers Typically Have 5-7 Days To Submit Their Mortgage App Or 1-2 Days To Provide Their POF
The Purchase Agreement indicates the maximum number of days Buyers have to make mortgage application.
The Buyers or their agent will share a copy of the Purchase Agreement and the related docs with their lender.
Ideally we would like Buyers to lock in their interest rate ASAP. Of course, in the end it’s 100% the Buyer's decision to lock in a rate knowing that once the rate is locked in, the rate cannot increase, or instead wait, and hope that the rates will decrease between now and the closing, realizing the rates could also increase costing the Buyers even more! NOTE: If Buyers decide to wait to lock in an interest rate. If the Purchase Agreement specified a specific mortgage loan interest rate, and it was not removed through the counteroffer process, then Mitch will typically require the Buyers to lock in an interest rate within 5-7 days or will remove the specific interest rate to the "best available" rate.
As A Cash Buyer, If The Buyers Did Not Provide Proof Of Funds With Their Offer, Then The Buyers Also Have A Set Number Of Days To Provide The Proof Of Funds After They Are Under Contract.
While the Purchase Agreement indicates the maximum number of days for the Buyers to make their mortgage application, Buyer Agents typical encourage the Buyers to reach out to their lender ASAP to start the process. To help with that, The Buyer's Agents will usually share a copy of the Purchase Agreement and the related docs with Lender who provided your pre-approval.
Buyers Typically Have 5-7 Days To Submit Their Mortgage Application
Line 79 Of The Purchase Agreement Shows You The Number Of Days, After Acceptance Of The Agreement, Buyers Have To Make Written Application For Financing. Or, If You Have A Cash Buyer, Then On Line 62 Of The Purchase Agreement You Can See The Number Of Days After Acceptance Of The Agreement, The Buyers Have To provide Proof Of Funds To You As The Sellers.
Buyers Have A Set Number Of Days To Confirm They Can Obtain Insurance After You Are Under Contract
Buyers need to notify the you about any issues the Buyer's encounter related to the insurability of the property.
Note: When some Buyer's Agents will, like Mitch, encourage Buyers to also ask insurance agents about any noteworthy insurance claims that they show on the property!
Buyers will typical pay for the insurance at closing!
Buyers Identify Any Undisclosed "Defects" With The New Property
Buyers Typically Have 10-14 Days To Identify Any Defects With The New Property
Lines 213-252 Of The Purchase Agreement Explain The Inspection Process. Specifically Line 215 Confirms The Number Of Days, After Acceptance Of The Agreement, To Perform Inspections And Request Repairs. Additionally, Line 225 Indicates The Number Of Additional Days Buyers Can Take, If Needed, For Any Follow-up Inspections And / Or Requests.
The Goals And Objectives
Selling a home is exciting, but the inspection phase can also feel overwhelming—especially when unexpected issues surface. The goal of the inspection process is not to determine whether a home is perfect, but to understand its condition, identify true defects, and make informed, strategic decisions moving forward.
Inspection Response Deadline & Extensions
Buyers typically have 10–14 days to identify and address inspection-related defects. Mitch’s Next Steps email will confirm the specific timeline outlined in your Purchase Agreement.
If the inspection reveals issues that require further evaluation, the inspection response period can usually be extended by 3–5 days to allow time for additional inspections or contractor assessments. Again, Mitch’s Next Steps email will confirm the specific additional time outlined in your Purchase Agreement.
Disclaimer:
This content is intended to provide general information for Mitch's clients about how defects are commonly evaluated in Indiana real estate transactions. It is not legal advice. Every transaction is unique, and outcomes can vary based on the facts of the situation and the terms of the purchase agreement. In addition to Mitch's guidance, Sellers are encouraged to seek legal advice for questions specific to their transaction..
The Three Elements Of A Defect
The Purchase agreement includes the legal definition of a “Defect" Per Indiana Code § 32-21-5-4. We sometimes also refer to these as Material Defects. There is no such thing in Indiana Law as a "Major Defect."
1. Significant Adverse Effect on Property Value
This element is often the least clear-cut, as the law does not define what dollar amount—relative to the sales price—constitutes a “significant” impact on value. Mitch generally considers an issue costing 1% or more of the sales price to correct as potentially meeting this element when evaluated purely on cost. However, other agents, Buyers, and Sellers may view this threshold differently.
Additionally, cost alone is not always determinative. Damage to a key architectural or structural component of the property may significantly affect the property’s value even if the repair cost is less than 1% of the sales price.
2. Significant Impairment to Health or Safety
Mitch believes the most straightforward way to identify issues that significantly impair health or safety is when they do not meet applicable building code. Building codes exist to protect public health, safety, and welfare by establishing minimum standards for design and construction.
Generally, a property is only required to meet the building code that was in effect at the time it was constructed—not current code standards that may have changed over time. An important exception applies when parts of the property have been substantially updated, such as a new roof or a kitchen or bathroom remodel. In those cases, the updated areas must comply with the building code that was in effect at the time of the update.
3. Significant Reduction of the Property’s Expected Useful Life
Courts have found that this element requires careful distinction between substantial repairs and routine maintenance.
For example, a leaking roof—if left unrepaired—can lead to rot, mold, structural instability, and potential safety hazards. This type of issue is more likely to be considered a defect. Conversely, a leaking faucet can also cause rot or mold if ignored, but courts generally view this as routine maintenance rather than a material defect.
The key difference between these examples often circles back to the first element—the cost of repair relative to the overall value of the property. A leaking faucet may cost a few hundred dollars to repair, while a roof repair or replacement can cost several thousand dollars.
Note: Mitch typically considers any active water leak to be a defect.
Not All Issues Are as Straightforward
Some conditions fall into gray areas and require deeper analysis. A common example is a window with a broken thermal seal.
Thermal windows are energy-efficient windows that contain an insulating gas between two panes of glass to reduce heating and cooling costs. Over time, normal expansion and contraction can cause the gas to escape, allowing regular air to replace it. This failure is typically identified by condensation forming between the panes of glass.
In winter, when it is warmer inside than outside, condensation appears on the pane closest to the exterior. In summer, when the interior is cooler, condensation forms on the pane closest to the interior. While the loss of insulating gas may only increase annual heating and cooling costs by approximately $0.30 to $1.00 per window, the more significant issue occurs when moisture evaporates and leaves a permanent cloudy residue between the panes—an unattractive cosmetic condition that cannot be removed.
Replacing the glass in a single window typically costs $100–$200, and because the primary impact is cosmetic, one broken thermal seal is usually not considered a defect. However, if a home has 30 windows and all have failed thermal seals, the combined replacement cost of $3,000–$6,000 on a $300,000–$400,000 home could meet the first element of a defect due to the cumulative impact on value.
Issues Typically Not Considered Defects
Unless Buyers are purchasing brand-new construction, it is neither reasonable nor realistic to expect a property to be "perfect." Issues that are purely cosmetic generally do not meet the legal definition of a defect. Common examples include:
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Unattractive or dated paint colors
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Scratched hardwood floors
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Stained or worn carpet
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Cracked or outdated ceramic tile
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Cracked concrete on patios, sidewalks, driveways, or basement floors
Another frequently misunderstood category involves items that are near, at, or beyond their typical useful life. Age alone does not make an item a defect if it is still functioning as intended. Examples include:
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Water heaters
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Furnaces
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Air conditioners
If these systems are operational and performing properly, age alone does not constitute a defect. Conversely, even a brand-new mechanical system that is not functioning correctly is considered a defect, regardless of age.
Note: Many Agents do not properly advised their Buyers on what is or isn't a defect. And even if they do educate them many Buyers will still ask for items as part of a Buyer's Inspection Response that are not true defects!
Can a Buyer Walk Away and Recover Earnest Money if a Defect Is Found?
In short: Contractually No, not automatically... Yet Some Buyers May Try!
The purchase agreement requires that if a defect is identified, the Buyer must provide the Seller with the relevant portions of the inspection report and give the Seller an opportunity to remedy the defect.
If a property component is damaged, deteriorated, nonfunctional, or improper—and it meets one or more of the three legal elements of a defect—and the issue was not previously disclosed, the Buyer may only elect to terminate the agreement if the Seller is unwilling or unable to remedy all defects prior to closing. In this scenario, then the Buyer "In theory" would be entitled to recover their Earnest Money.
Mitch emphasizes the phrase “in theory” because when a transaction terminates, a mutual release is typically required. That release specifies how the earnest money will be handled—whether it is returned to the Buyer, retained by the Seller, or divided between the parties. Since agents cannot force clients to sign a mutual release, disagreements over what are actual defects and how the earnest money should be distributed may result in litigation, making outcomes difficult to predict.
It is worth noting that Indiana courts often tend to favor Buyers in Earnest Money disputes. Buyers usually incur inspection and appraisal costs, while Sellers can often resell the property. As a result, courts may find it difficult for Sellers to demonstrate financial harm caused by a failed transaction. Still, it's impossible to predict with certainty, how a court will rule!
Can Buyers Dictate How Repairs Are To Happen or Demand Money Instead?
Buyers cannot dictate which contractors the Seller must use to complete repairs prior to closing. Likewise, buyers generally cannot specify how repairs are performed beyond requiring that they be completed in accordance with applicable building code. This may include the use of licensed contractors (such as licensed electricians or plumbers) when required by code. Still some uneducated Buyers may request a specific repair and/or a specific contractor to address the repair!
If repairs are to be completed after closing, Buyers though may have more influence over contractor selection. Prior to closing, Buyers retain the right to reinspect completed repairs, which is why the Sellers, vs the Buyers, control the repair process.
Finally, while Sellers may offer money in lieu of repairs, Buyers cannot demand it. If a mortgage loan is involved, funds in lieu of repairs must typically be handled as:
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Checks issued from the Seller’s proceeds at closing, made payable to the repair vendors and held by the Buyer until work is completed, or
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Buyer closing cost credits or other lender-allowable fees
For cash purchases, Buyers may receive funds at closing, but more commonly the purchase price is simply reduced by the agreed-upon repair amount
Scheduling the Inspection
Inspections generally begin at 8:00 AM or 12:00 PM and typically take 3–6 hours, depending on the size of the home. For larger homes a second inspector may also be present.
While Buyers are strongly encouraged to attend the inspection whenever possible, Sellers and any pets should be out of the home during the entire inspection time. If Buyers cannot attend the full inspection, then Buyers may arrive during the last 60–90 minutes, which allows the inspector to review any findings discovered earlier and bring the Buyers fully up to speed.
Agents may also attend the inspection although most agents usual arrive during the final 30–60 minutes of the inspection to review any major concerns directly with Inspector and/or Buyers.
If, even before submitting an offer, potential issues are noticed, identified, or suspected—such as broken thermal seals or wood rot—A Buyer's Agent may proactively schedule contractor evaluations, during the allowed inspection timeline.
Special Concerns & Communication with the Inspector
If Buyers have specific concerns or items they would like the inspector to focus on, they may request to speak directly with Inspector when confirming services and arranging payment.
Following the inspection, both the Buyers and the Buyer's Agent will receive the written inspection report—typically by the next morning.
Understanding Inspection Findings & the Buyer’s Inspection Response
The Inspector's role is to identify and document the condition of the property; they do not determine which items qualify as defects for negotiation. Buyer's Agents advise the Buyers on which items are reasonable to request that the Seller address.
This guidance should take into account any limitations in your Purchase Agreement, such as:
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Minimum repair thresholds (commonly $1,000–$1,500), and/or
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An agreed-upon repair deductible (often around 1% of the purchase price)
While Mitch advises Buyers to limit their Inspection Response to true defects only, many Buyer's Agents allow the Buyer's to 100% drive the inspection response.
Some Buyer's Agents typically share only the relevant portions of the inspection report with the Seller rather than the full report. If this happens even the selected pages may still include items the Buyer is not asking the Seller to address. Since inspection reports commonly run 30–40 pages, providing only the relevant 20 pages can ensure the Seller is aware that additional items were found but not requested—helping maintain leverage and goodwill.
For example, a common inspection finding is a missing handrail on basement stairs. By making selective, reasonable requests, experienced Buyer Agents know that Sellers may be more inclined to say “Yes” to the Buyer’s Inspection Response rather than becoming accustomed to saying “No.”
Follow-Up Contractors & Additional Inspections
After the inspection report is received, the Buyer's Agents will review it with the Buyers to determine whether any follow-up inspections or contractors are recommended. For example, if the Inspector notes that a furnace is excessively dirty or shows rust that could indicate a larger issue, the inspector may recommend an HVAC contractor clean and further inspect the system.
The Buyer's Agents will coordinates all property access with the listing agent, and the showing service.
The Basic Home Inspection Starts With Inspecting And Evaluating
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- Heating and Central Air Conditioning
- Interior Plumbing and Electrical
- The Roof, Attic, and Visible Insulation
- Walls, Ceilings, Floors, Windows, and Doors
- The Foundation, Basement, and Structural Components
Other Inspections And Testing Buyer's Agents may encourage Buyers To Have Completed
All Property Types
More Common On... Houses, Townhouses And Detached Condos
Less Common On... Houses, And Townhouses
Buyers Have A Set Number Of Days To Review & Then Accept or Reject Any HOA Covenants, Conditions, Restrictions & Fees
Buyers will need to notify the Seller about any issues related to the HOA documents typically within 7 to 12 days; from the date they provide us the documents. Note: Most times Mitch attaches these documents to the listing and Mitch requests receipt of the HOA docs as part of any counteroffer to the PA. This means the Buyer's review period begins once the Purchase Agreement has been accepted.
If the HOA docs were not available for download with the listing, then Mitch will share with the Buyer's Agent any HOA docs ASAP so that the Buyer's Review period starts and ends ASAP!
If Buyers change their mind for any reason, such that they do NOT want to proceed with the purchase based on the HOA documents, then the Buyers will have to notify the Seller before the end of that review period and ask for their earnest money back.
This is the easiest way to escape a purchase agreement with your Earnest Money in hand, which is why it’s typically the shortest contingency period in the agreement.
Buyers Typically Have 7-12 Days To Accept Or Reject Any Mandatory HOA
Lines 335-356 Of The Purchase Agreement Discusses When The Property Within A Community/Development Has A Mandatory Homeowner Association. Line 337 indicates The Number of Days After Contract Acceptance, That The Sellers Have To Provide Buyers With These Documents. Line 346 indicates The Number of Days After The Sellers Provide The Documents, That Buyers Have To Review & Accept Or Reject The HOA. (Note: Often These Docs Are Online With The Listing. This Means The Buyer's Review Period Starts With Acceptance Of The PA.)
Appraisals As Part Of The Mortgage Process
If the Buyers are buying the property with a Mortgage Loan, and the appraisal reflects a value less than the sales price, then this would be a “Get out of Jail Free Card!” That means the Buyers could walk away from the sale and get their earnest money back!
Appraisals When The Buyers Are A Cash Buyer
If the Buyers are buying the property with cash, and and as part of METHOD OF PAYMENT, Part 1 Cash, the Purchase Agreement also indicated there will be an appraisal, and the appraisal reflects a value less than the sales price, then this would be a “Get out of Jail Free Card,” that means the Buyers could walk away from the sale and get their Earnest Money back!
Appraisals When Buyers Have Also Included Appraisal Gap Coverage To Make Their Offer More Attractive
If the Buyer's offer included appraisal Gap Coverage then this means the Appraisal Amount Must Only be equal to, or greater than, the Sales Price LESS the amount of any appraisal gap coverage. For example if the Purchase Price is $500,000 and the Buyers included $20,000 Appraisal Gap Coverage this means as long as the appraisal amount is $480,000 or higher then the Appraisal Contingency has been satisfied and the Buyers must proceed to close. If however, in this example, the property only appraises for $470,000, then since the appraisal amount of $470,000 was lower than than the Sales Price of $500,000 less the $20,000 Appraisal Gap Coverage, then the Appraisal contingency has not been met and then this would be a “Get out of Jail Free Card,” that means the Buyers could walk away from the sale and get their Earnest Money back!
If the property does not appraise for the Sales price, reduced by any appraisal gap coverage, then the Buyers could also try to negotiate with you as the Seller, for a lower price that’s either equal to the appraisal or somewhere between the appraisal and the agreed upon purchase price. Just understand that in the same way the Buyers can walk away if a property does not appraise, then you as the Sellers can also walk away! You are NOT obligated to sell your property for the amount of the appraisal. Nor is there is any guarantee that both you and the Buyer, will agree on a new sales price that’s been triggered by an appraisal that came in lower than the purchase price including any appraisal gap coverage.
An Appraisal Will Typically Be Part Of A Mortgage Loan & May Be Part Of A Cash Purchase
An Appraisal Is A Professional, Independent Opinion Of A Property's Fair Market Value, Created By A Licensed Appraiser, Primarily Used By Lenders To Ensure They Don't Loan More Than The Property Is Worth. Cash Buyers May Also Have An Appraisal Done To Ensure That They Don't Pay More Then The Property Is Worth. If A Cash Buyer Made The Purchase Contingent On An Appraisal Then This Will be Indicated On Line 65 Of The Purchase Agreement.
A mortgage loan "clear to close" (CTC) is the Buyer's lender's final, official approval, meaning the Buyer has met all conditions, and the loan is ready for the closing table to finalize the purchase of the property. It's the "green light" after the Buyer's lender has verified all documents, credit, and finances, allowing the Buyer to schedule the closing and prepare for signing.
What it signifies:
- Final Approval: It's typically the last step before Buyer can close and get the keys, confirming all requirements are met.
- Lender's Green Light: The lender authorizes the loan to be funded.
- Documents Verified: All of the Buyer's financial and property-related documents have been thoroughly reviewed.
What happens next:
- Closing Disclosure (CD): The Buyers will receive the final loan terms and costs, typically 3 business days before closing.
- Scheduling Closing: If the closing date, time, and location, have already been tentatively scheduled with the title firm and the Buyer's side then Mitch will just confirm those details with the all parties including the title firm. If closing has not already been tentatively scheduled, then Mitch will confirm your availability, along with the Buyer's side against available open time slots with the title firm.
- Final Walkthrough: Buyers will typically do a last check of the property to ensure it's in good condition. This will typically happen the afternoon before closing or the day of closing right before the closing happens.
- Funds Wired: The Buyer's lender sends the loan funds to the title company on the day of closing.
What Should Buyer's Avoid Before Closing That Individually Could Each Kill The Buyer's Clear To Close :
- Major Purchases: Taking on new debt (like furniture, appliances, or vehicles.)
- Job Changes: Changing employers or income sources.
- Credit Activity: Applying for new credit or missing payments.
- Large Bank Deposits: Being unable to explain any significant new bank deposits
Buyers Typically Have 21-45 Days To Obtain Their Mortgage Loan Clear To Close
Line 83 Of The Purchase Agreement Indicates the Exact Number of days That Buyers Have To Obtain Their Mortgage Loan Clear To Close Approval. If An Approval Is Not Obtained Within The Time Specified, The Purchase Agreement Will Terminate Unless All Parties Agree To An Extension Of Time For This Purpose Via An Amendment To The Purchase Agreement
The Next Steps Before You Close On The Sale Of The Current Property
About a week before closing Mitch will send you a next steps email that will provide clarity around the closing process.
The Closing Statement From The Title Firm & The Amount You Receive From Closing
We don’t typically know the exact amount of Net Proceeds till we get the final closing statement from the title firm 2-3 business days before closing. Once Mitch receives and reviews the Closing Statement he prepare a recap of the Projected Net Proceeds that Mitch shared with you when you listed versus the Actual Net Proceeds. Mitch will share a copy of this and the Closing Statement with you and he will request 10-15 minutes to walk through the closing statement over the phone.
Sending The Wire For Closing
Once the Buyers receive the Closing Statement the Title firm will send the Buyers the wire instructions through a secure email. Note: Wire instructions Never Change! If Buyers receive more than one set of wire they should instructions immediately contact their Buyer's Agent and/or the Title Firm
The Buyer's wire should be sent out no less than 24 "business day" hours before closing. So, if your closing is scheduled for Monday morning at 9:00 AM, then the Buyers should send the wire no later than the previous Friday morning around 9:00 AM. Note: if the previous business day before closing is a bank holiday, then the Buyers should send the wire on the first prior business day before the holiday again around the same time of day as the closing.
If the Buyer's schedule in the three prior business days is exceptionally busy, or the Buyers will be out of town for any reason, then the Buyers should reach out to their lender and ask the Lender to give then a rounded-up amount before they have the final closing statement. This will let the Buyers arrange for the wire before their schedule gets crazy and/or before the Buyers leave town.
If you’ll want to get a wire, vs a check from the title firm for the Net Proceeds, then you will need to bring your inbound routing number and the account number for where you want the funds sent.
Note: The routing number on a check is not always the “inbound” routing number especially if you bank with a credit union or an online bank. So, please confirm with your bank what their in-bound routing number is and then bring this info with you to the closing.
When Funds For Closing Are Not Coming From A Local Brick & Mortar Branch
If any of the funds Buyers will use for closing, are coming from an investment brokerage, or an online bank, or a bank that DOES NOT have a “brick and mortar” location in the greater Indy area then Get Buyers should get more specific next steps here!
The Final Walkthrough Of The Property Before Closing
The Buyer's Agent will want to meet the Buyers at the property to do the final walk through to make sure the place is as it should be (it hasn’t been struck by lightning, or there hasn’t been some other sort of damage to the property) before you close. This is typically done right before closing or it can be done the afternoon before closing if closing is happening early in the morning or the Buyer's not available right before closing. Sellers and pets should be out of the property during this time! Typically, this final walk through will only take 10-30 minutes. If the walkthrough is happening immediately before closing, then the Buyers will go usually go straight to the closing when they leave the property.
The Closing Date, Time & Location
This email will include all of the details and contact information about where closing will be happening.
Get more details on the actual closing process here!
Taking The Utilities Out Of Your Name Effective The Day Of Closing
All utilities should typically be taken out of your name effective the day of closing. If you will not give possession till a day after closing then you should schedule utilities to be out of your name that date you will give possession of the property. If you will be giving possession on a weekend or holiday then be sure to have utilities taken out of your name effective the first business day AFTER you give possession! If you do not have the utilities scheduled to be turned off then then the Buyers may not be able to put the utilities in their name, effective the day they get posession!
As You Head Towards Closing This Email Will Layout All Of The Next Steps
By This Point There Are Not Any More Get Out Of Jail Free Cards Unless Any Inspection Repairs Have Yet To Be Finished. Typically, The Only Reasons A closing Would Not Happen At This Point Is If Something Happens To The Property (Damage Of Some Sort That Can't Be Addressed Before Closing) Or If Something Physically Happens To Either The Buyers Or Sellers. Beyond These Two Scenarios The Only Other Event That Would Typically Derail Closing Would Be If The Buyer(s) Lost Their Job Before Closing.
Buyers Typically Have 30-40 Days To Close On The Purchase Of The Property
Line 95 Of The Purchase Agreement indicates the "Earliest Closing Date." Mitch uses the description "Earliest" For This Closing Date Because The Purchase Agreement Gives The Ability To Delay The Closing Date By A Number Of Days, Also On Line 95 Of Purchase Agreement, Related To An Event That's Also Indicated On Line 95. The Most Typical Event That Could Delay Closing is The Date The Buyers Obtain Their Clear To Close From The Lender. Another Event That Could Be Indicated Is Agreement On The Inspection Response Or In Theory Any Of The Other Contingencies In The Purchase Agreement,
Attendance At Closing
If you will not be able to attend closing for any reason then please let Mitch know ASAP. You have several options if one or more of the Sellers is unable to attend closing in person. Regardless of which scenario seems the most logical or convenient for you, all of these options require advance planning by the title firm, can require the Buyer's lender's approval and involve an extra cost. So again, please let Mitch know ASAP so that the title firm can schedule and coordinate these options.
A) A Real Estate Power of Attorney (POA) is a legal document that lets you name an "agent" (attorney-in-fact) to handle the selling of the specific property, for you (the principal). It's typically prepared by the title firm for an extra $50 -$150 and is useful if you will be absent or incapacitated. It must be specific about powers (limited/general), properly signed, witnessed, and notarized to be valid.
B) A Remote On Line Closing (RON) is a virtual closing that is very similar to a Zoom or Teams Meeting. The closing agent will have you hold up your state issued ID so that a copy can me made virtually and then the closing agent will walk you through all of the necessary forms signing each one virtually. This process of an on-line Notary in Indiana came about during and after Covid as an alternative to in-person closings. RON closings typically cost an extra $75-$150 and just require that parties signing have access to the internet and a laptop or desktop computer that includes both a microphone and a camera.
C) A Remote Closing is an in person closing where a local Notary, wherever you will physically be at the time of closing, meets you to take a photo copy your ID, walks you through the paperwork, and has you sign everything as needed. Remote in-person closings typically cost an extra $175-$250 and usually happen at least 24 Business hours before closing so that the original signed paperwork can be overnighted back to the title firm before the actual closing.
What Happens At Closing
The first thing that will happen at closing is the closer will ask everyone signing to provide their ID so that they can make copies of the IDs. The most typical form of ID is your driver’s license or a state issued id with a photo like a passport. while they prefer driver’s license, either will work.
Whatever identification you plan to bring must be valid, which means not expired. If you forget your ID or if the ID is expired, then closing will not happen! So please make sure to check the expiration date AND be sure you bring your valid ID with you for closing, after you check the expiration date!
Funds For Closing
Funds From A Single Source Of $10,000... Or More Must Be Wired To The Closing Agent's Escrow Account - As you may know, any time the funds for closing exceed $9,999.00, then all funds must be wired early enough before closing, so that the title company has the funds at closing. We won’t typically know the exact amount needed for closing till two to three business days before the actual closing.
If the Buyers will be out of town right before closing or anticipate a crazy busy schedule with work or other needs or the Buyers just want to deal with the wire transfer sooner than 2-3 business days before closing then the Buyers can have their lender provide you a rounded up estimate of funds needed for closing.
Wire Transfers From Credit Unions, Investment Brokerages, On-line Banks And/Or Banks Without A Brick & Mortar Greater Indy Branch
While most local bank branches can typically initiate and complete a wire transfer within 1 business day, it’s not atypical for on-line banks, credit unions, or investment brokerages may tell Buyers that wires can take 3-4 or more business days from the time the Buyers initiate the wire till the time the Title firm literally receives the actual funds.
Mitch had a Buyer, where funds were coming from a well known "national bank" that did not have a brick and mortar branch anywhere in Indiana. This bank would not allow a wire of the necessary size, to be initiated either over the phone, or on-line! That meant the Buyer had to drive to Chicago to initiate the wire transfer for closing. Another of Mitch's Buyers had funds, coming from a common On-line Bank, where the wire transfer literally took an unexpected 5 business days. This forced a delay in funding the closing. You as the Sellers do not have to agree to such delays although it's typically better than just starting over with a new Buyer!
Absent funds for closing, by the closing date, the you as the Sellers can walk away and keep the Buyer's Earnest Money!
So, if any of the funds Buyers will use as part of their down payment at closing, are coming from an investment brokerage, or an online bank, or a bank that DOES NOT have a “brick and mortar” location in the greater Indianapolis area, then Buyers will want to speak with someone at their bank/investment firm to gain clarity on their wire transfer process.
Below, I have listed several questions Buyers will want to obtain answers for, ideally in writing, from the financial institutions that currently have your funds that you will need for closing.
- Can the Buyer initiate a wire transfer online or does the Buyer need to visit in person? Note: an EFT is different from a wire transfer, and an EFT cannot be used to move funds for closing!
- Is there a limit on the amount that a Buyer can wire daily or via online before the Buyer must visit in person?
- From the time the Buyer initiates a wire transfer, how long will it take till the Buyer can be given a Federal Reference Number/SWIFT number? And, does this amount of time change with an online vs an in-person request?
- From the Time a Buyer initiates a wire transfer, how long does it typically take till the receiving party has the funds in their account via the wire? Again, does this amount of time change with an online vs an in-person request?
- Are wire transfers processed only at or before certain times during the day, and if yes what are those times/deadlines?
Ask Mitch About The Value Of A Properties In An Area You Are Considering!
If you're like most home buyers, you want to pay the least amount of money for a property. And, what a property is worth in terms of Market Value, and what it's worth to you as the buyer, could be two very different amounts!
While only the Buyer can decide what it's worth to them, real estate professionals doing an Appraisal or a Market Analysis are sharing their personal opinions on the Market Value at that point in time. Real estate Market Values though are not like a ten-dollar bill that is worth $10 regardless of if it’s crisp and brand new, or if it’s twenty years old, dirty and torn. Neither the condition of the bill in your hand as the buyer, the condition of other ten-dollar bills, nor the location of where you are holding that ten-dollar bill will change its value! If the Market Value of real estate was also this precise and exact, just like the value of a ten-dollar bill, then there would frankly be no need for real estate agents!
Accurately evaluating the value of a house, townhouse, or condominium is a complex calculation that leverages years of experience and expertise like Mitch has, as one of the Top REALTOR's in the Greater Indy area! So let's start at the very beginning - with the RIGHT price! And the best way to find the RIGHT price is to ask Mitch.
1/3 Is About The Property Itself: The Location, Condition, Updates, Bed & Bath Count, Size, Age & All Features
1/3 Is About Similar Places For Sale A Buyer Could Also Buy, At The Same Time, In The Same & Similar Areas
1/3 Is About What Similar Properties, In The Same Or Similar Areas, Have Sold for In The Last 6-12 Months
Learn About 4 Common Ways To Determine The Value Of A Property - The Most Accurate (4 stars) To Least Accurate (1 star)
Instant Online Value Estimators
The Iron Triangle Of Service: Good, Fast, And Cheap -- PICK TWO. You Can Never Have All Three, As The Saying Goes!
Online Value Estimators are Fast and Free... And Free is the ultimate definition of cheap! So, since you can NOT have all three, and these online instant valuations are Fast and Free, then that means these Estimators can NOT also be Good!
There are many real estate and lending websites offering estimators out there. You can use this if you want a general estimate of your home may be worth. While these can help you decide if it’s worth considering selling or refinancing, these sites tend to dramatically undervalue or overvalue property values. So, using these when selling or purchasing a new place could create unrealistically high or unreasonably low expectations that could cost you thousands of dollars as both a seller or a buyer!
About Mitch
Mitch leverages his local expertise, combined with his meaningful business and life experiences, and decades of professional leadership and growth in the construction and technology industries to contribute to his success as one of Greater Indy's Top REALTORs.
Mitch is committed to helping change the lives of his clients as they start their next chapter, by making it easier, more enjoyable and more profitable for his clients that design, build, buy, and sell their home, condo, townhouse or investment property!
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