Illinois Affilliate Flat Fee MLS Brokerage
Contract To Closing
The Contract  

iRealty Flat Fee Brokerage for sale by owner the offer
If you are selling your home and and have gotten an offer or two from potential buyers, consider these key points first before sealing the deal:

1. Price

If you receive what you consider an insultingly low offer, don't give in to an emotional response. Be realistic, objective and, above all, cool. Examine the offer. Was the price based on an independent appraisal or a broker's market analysis? How long has your property been on the market? How many written offers have you received? What kind of market are you in -- buyer's or seller's?

Don't use price alone as a reason not to counter or negotiate. A first offer may reveal what's most important -- price or terms -- to this particular buyer and thus give you the key you need to begin the bargaining.

2. Earnest Money 

Earnest money, also often referred to as “good faith money,” describes a pre-closing deposit that a buyer suggests when they submit an offer to purchase a home. The agreed amount of earnest money becomes a condition of the contract, and in most cases excepting distress sales, can be negotiated between the buyer and seller.

Once that amount and the other terms are agreed upon, the contract is signed and the earnest money is delivered to the party designated to hold the earnest money per the contract. Most frequently, the earnest money is held by the listing brokerage, but it can be held by the buyer’s brokerage office or attorneys representing the parties in Illinois. A special bank account, known as an escrow account, will be opened on the buyer’s behalf in the buyer’s name to secure the transaction until the parties are ready to close on the property. At that time, the money will be applied to the purchase price of the property.

In the Northern Illinois market, $1,000 is the initial amount commonly-accepted as a minimum, but depending on the price of the home and the competitiveness of the current market, the initial earnest money deposit may actually be much larger. When faced with multiple offer scenarios where more than one party has prepared an offer on the same home, some buyers will choose to strengthen the terms of their offer by including a substantially higher earnest money deposit. Depending upon the other terms of any offer, a larger payment can create a potential edge over other offers when the buyer’s financial picture permits it. Most deposits can be paid by personal and bank checks or by wiring the funds directly to the escrowee’s account.

3. Financing

If the contract is contingent on a buyer's ability to obtain an acceptable loan, does the clause spell out what actions are required by the buyer? What interest rate and number of discount points does the buyer consider "acceptable"? Is there a time limit? What will happen if no loan is secured by the agreed-on deadline? How will you know when the buyer gets a loan commitment? How can the contingency be removed? Generally, you'll want to leave the buyer as few escape hatches as possible.

4. Response Deadline

You'll be asked to respond to a contract offer within a specified period of time -- say, one or two days. Try to get as long a response time as possible. If you are presented with a desirable contract containing a deadline you are unable to meet -- perhaps because your attorney or spouse is out of town -- counter promptly with a more suitable time frame -- and an explanation.

If you think you'll have other offers coming in, you'll want to buy as much time as possible to review them and perhaps use one offer to jack up another.

5. Sale of Buyer's Home

Should you cooperate with a prospective purchaser who must sell a home before buying yours? Maybe. But when you accept a contract offer contingent on the sale of the buyer's house, you are linking the sale of a property you know -- yours -- to the sale of one you don't know -- his. You'll be taking your house off the market until the buyer's house is sold and closed. If things go awry, you could end up weeks later just where you started -- hanging up a "for sale" sign.

Nevertheless, if you believe accepting an offer contingent on the sale of the buyer's home is the best you can hope for under the circumstances, seek the advice of a broker familiar with the market in the area of your potential buyer's home. Assure yourself that the property is salable and reasonably priced. Get marketing plans set out in the contract. For example, it should be clear what the owner proposes to do if the home doesn't sell after one month, after two, and so on.

Consider asking for an up-front nonrefundable option (in lieu of an earnest-money deposit), which you will retain if the deal fails to close within a specified time. Have the contingency sale clause reviewed by your attorney. Better still, have her write it.

6. Settlement Date and Occupancy

If you're selling your home because you already have another house under contract, seek a settlement date that will enable you to take your sales proceeds to the next closing. Be realistic; the buyer of your home will probably need at least 30 to 50 days to arrange financing and come to closing.

7. Attorney and Inspection Period 

After a contract gets executed (which means signed by both the sellers and buyers with copies delivered to all parties) the contract automatically moves forward into the attorney review and inspection time period.  This time period is usually 5 to 7 business days depending how your contract is written so read your contract carefully.

Generally, first up is the inspection.  It’s important to schedule the inspection for as soon as you can after the contract is executed.  Ideally the next day or two.  The inspection itself takes 2-3 hours depending on whether you’re buying a condo or a single family home and you pay the inspector at the inspection’s conclusion.  It then takes 24-48 hours for the inspector to write up the report and deliver it to the buyers. 

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When preparing for a radon measurement it is very important to maintain closed building conditions for a period of twelve (12) hours prior and during the test. Whether the house is open or closed for short or extended periods of time prior to the 12 hour requirement has little or no impact on the measurement. Closed building conditions are considered as follows.

  • Normal entry and exit of the home is permitted as long as the door is closed behind the person and not allowed to remain open for extended periods of time.
  • Sliding glass doors should be used only when absolutely necessary.
  • All windows should remain closed during the measurement.
  • Heating and cooling systems should be operated in the normal fashion with the fan set to “auto” and the temperature maintained between 68 and 74 degrees.
  • Ceiling fans should not be operated in the room where the testing monitor is placed.
  • Whole house attic fans should not be operated during the test.
  • Portable humidifiers and dehumidifiers should not be operated during the testing.
  • Fireplaces should not be operated during the test and the chimney damper should be closed.
  • Operation of clothes dryer are permitted as needed.
  • Newly constructed homes should be in “ready to move in condition” when the test is preformed.

The requirements listed above are designed to protect both the seller and the buyer as some of the requirements can lower the radon concentration and others can raise it.

Once the inspection report comes in it should be discussed with your agent who will then negotiate any inspection repairs or credits at closing with the seller’s agent.

While the above is happening, the attorneys are also reviewing the contract.  Once any inspection items have been negotiated, the attorneys will negotiate any changes they want made to the contract and write up the inspection decisions.  Once all parties agree to everything, the attorneys will sign off on the deal, the attorney review time period will end and the deal will move forward to the buyer’s mortgage officer for the ordering of the appraisal and underwriting.

As you can see, a lot has to happen in just 5 to 7 business days.  That’s why it’s important to have your attorney and inspector picked out before you make an offer on a property.    It’s also important to get the inspection done asap after contract acceptance/execution because everything in the attorney review time period hinges on the inspection report.

About 2 weeks later the appraisal will need to be done and this will be scheduled by the lender. 

What to expect at the Closing.

The closing is an important day for you as a home seller. You will transfer the property to the buyer, fully pay off any mortgages, and receive your sales proceeds. If you are using the proceeds for a new home purchase on the same day or shortly thereafter, it is particularly important that your closing runs smoothly. This article will help you figure out what to expect and how to avoid glitches.

What Is a Closing?

Closing is when tiRealty flat fee mls listing sold homehe house buyer and seller fulfill all of the agreements made in the sales contract. In more literal terms, it is about the transfer of money and documents so that you, the seller, can transfer ownership and possession of the property free and clear to the buyer. Also, you will pay off all loans that you are still carrying on the house and pay all of the parties who contributed documents or services to facilitate the sale and closing.

If you agreed to make any repairs to the property or take any other action to improve it, or to take action to clear title to the property (such as removing a shed encroaching onto a neighbor’s property), all of these agreed-upon endeavors should be completed by the closing as well. The exception would be if you and the buyer made a separate contract for the work to be completed at a later date.

A closing is often called “settlement” because the seller, together with the buyer, the buyer’s lender, the sales agents, and the seller's lender, are “settling up” among yourselves and all of the other parties who have provided services or documents to the transaction. To make this process secure and enable all of the parties involved to treat all of the closing tasks as having taken place simultaneously, you will most likely hire a disinterested third party, called a “settlement agent” or “escrowee.”

The escrowee will take in all of the documents, money, and other items needed to close from the parties assigned to furnish them, pay out the money necessary to clear title, pay off all of the old lenders and lienholders, and pay the sales agents and other service providers.

Where Will Your Closing Happen?

Your closing will take place in the office of the escrowee. The escrowee is typically the title insurance company that insures the buyer’s title to the property. However, in some places, such as Alaska or Southern California, you are more likely to close at the lender’s office or at an escrow company.

Upon request, some title or escrow companies will send a mobile escrowee to close in a location convenient to all of the parties. Sometimes, the buyer’s lender will host the closing and act as escrowee, or bring in a notary or escrow company employee to act as escrowee.

Your attorney, or the buyer’s attorney, may offer his or her office, but recent restrictions in client trust accounting may make it impossible for the attorney to disburse funds immediately, so an escrow company may do the actual transfer of funds.

Sometimes the escrowee will take full responsibility for the closing, taking in and disbursing funds, explaining which documents are what, and sometimes even drafting (if the escrowee is a licensed attorney) some or all of the necessary documents.

Other closings are “witness-only.” That means that a notary or attorney goes to the closing location selected by the buyer and seller to provide the documents and disbursement services on behalf of the buyer’s lender. However, the notary or attorney will not explain the legal effect of the documents or the closing. Witness-only closings are not legal in all states. For example, Connecticut, Delaware, and Georgia require an attorney to complete all aspects of the closing. These closings will often occur in the attorney’s office.

In some states, the seller will close through escrows that occur over a period of days or weeks. Other states, have what are known as “table closing,” in which the entire closing, including the deposit of documents, funds, and other items required to close, and the final disbursement of all the escrow deposits, will occur at a meeting of the parties on a specific date.

Should the Seller Attend the Closing?iRealty for sale by owner mls listing the closing

Unlike the buyer, who may have to attend the closing to sign original loan documents delivered by the lender to the closing, you, as the seller, may or may not need to attend.

For either a conventional escrow closing or a table closing, you may be able to pre-sign the deed and other transfer documents. You may even give your attorney a power of attorney to sign any incidental documents for the escrowee. Your sales proceeds can be wired directly to your bank or your new home purchase escrow if you are purchasing on the same day as, or shortly after, your sale.

Attorneys and escrowees may differ on the issue of whether the seller should attend the closing. Some advantages of not attending are that you can use the time to attend to other important matters, such as completing your move. By not attending the closing, you may also avoid potentially tense conversations with a buyer who may be concerned about minor, immaterial defects and seek closing credits that are not required by the contract.

After the Closing

The closing is complete when the escrowee pays off your lender and other lien holders and service providers, pays your sale proceeds to you, places the deed (and the buyer’s mortgage if any) for recording with the county recorder of deeds, and gives all other transfer documents to the buyer.

After a completed closing, you are no longer the owner of the property. Unless the contract or another side agreement states otherwise, you must relinquish possession of the home by giving the buyer all keys, garage door openers, and all other devices that control the home’s systems and appliances.

You are expected to have completely moved your household and your possessions out by this time as well, and left the place broom-clean, at a minimum. Absent an agreement with the buyer that allows you to stay longer, you can be evicted, or the buyer may sue you for damages caused by your breach of the sales contract.

If you believe you may not be able to move out on or before the closing date, you should negotiate a post-closing possession agreement with the buyer, sometimes called a “rent-back.” Ask the buyer for this as soon as possible, either at the time you negotiate the sales contract or well before the closing. The agreement should allow you to stay in the home for a specific amount of time in exchange for daily or monthly rent, depending on the length of time you will remain in the home. (In a hot market, however, an eager buyer may allow you to live in the house for a month or more rent-free.) The rent should cover your possession (you are now like a tenant in what was once your own home), hazard insurance, and real property taxes for the time you remain there. You will be responsible for any damage to the home that occurs during this time.

Shortly after receiving full payment of your outstanding mortgage loan, your lender should prepare and deliver a release of mortgage to you. Sometimes, the lender will send the original release to the escrowee or directly to the county recorder of deeds for recording, but it is important that you make sure the release is recorded and returned to you.


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