In Part 1 of this 3-part series, we discussed the most obviously important aspect of your offer – the PRICE! This month we’ll cover a less obvious but equally important topic – the DATES.
When making an offer on your Cape Cod home, there are numerous dates that must be identified and all are important. Here’s a quick description of each.
Expiration – This is the date and time at which the offer expires. The Seller must reply to you by this date and time, or technically, your offer is off the table.
Inspections – This is the date by which you will complete your inspections of the property. A period of 2 weeks after the acceptance of the offer is usually allocated for any and all inspections.
Inspections Response – This is the date by which you must respond to the Seller about the inspection if you wish to back out of the deal or request any concessions from the Seller. If this date comes and goes and you do not say anything to the Seller, it is assumed that you are proceeding with the sale, and failure to do so could result in the forfeiture of your initial deposit. We will discuss this further next month.
Purchase & Sale – This is the date by which you will sign a more elaborate and detailed contract with the Seller known as the Purchase & Sale Agreement (or P&S for short). This is typically done within 3 weeks of the initial offer being accepted and AFTER you have had your home inspection. But there are no firm rules and there are always exceptions. Your attorney is heavily involved with the preparation and review of the P&S on your behalf.
Mortgage – When a purchase involves a mortgage, the offer will specify a date by which you must have a mortgage commitment from your Lender. This is typically 3-4 weeks after the signing of the P&S, depending on how easy your loan is likely to be. A mortgage commitment is FAR different than a pre-approval. It is given to you by the Lender after they have completed a forensic review of your financial profile and background. Once you have a clean mortgage commitment from the Lender, you will soon be ready to close on the house. Another date specified in this section is the date by which you must have submitted at least one mortgage application. This date frequently coincides with the P&S signing date, since most lenders don’t start working on the application until they have a signed P&S.
Closing – This is the date that you plan to close on your mortgage (if there is one) and take possession of the home.
If your offer is accepted by the Seller, you should of course do your best to meet all the deadlines laid out in the offer. However, it is not always possible, and in those cases, the Buyer can request an extension to one or more dates. For example, after your standard home inspection, you may wish to order a pest inspection based on termite damage uncovered during the home inspection. This may require an extension to the inspection deadline. Or your mortgage lender may require a little more time before granting you a firm commitment, in which case you would need to request an extension to the mortgage commitment deadline. These are common occurrences, but keep in mind that the Seller doesn’t HAVE to agree to any extensions. So be sure you are always operating with the phrase “Time is of the essence” in mind.
Stay tuned for the final part of this series which will further explore the various Contingencies associated with your offer.