Today I wanted to take a minute to talk about transaction timelines, also known as contingency timelines. If you buy or sell a house, you will be bound by these timelines, and it’s important to know that these timelines are in place to protect the buyer’s earnest money.
After your offer on a home has been accepted, you have a 24-hour honeymoon period, and then the clock starts ticking on the timelines. Whether you’re buying or selling a home, you need to know that there are three basic contingency periods: the seller disclosure period, the inspection period, and the financing period.
The seller disclosure period starts five days after mutual acceptance and gives the buyer the chance to review the seller disclosures and terminate the contract if they don’t like what they see or they just get cold feet. The buyer can terminate the contract and get their earnest money back.
The second period is the home inspection period, which runs 10 days after mutual acceptance and ends at 5 p.m. sharp on the 10th day. At this time, all inspections must be completed and all repairs need to be negotiated. If by 5 p.m. on the 10th business day the buyer and seller can’t agree to repairs, either one of them can terminate the contract and the buyer will get their earnest money deposit back.
The third contingency period is the financing period, which typically doesn’t start until the very end or almost up to the closing date. An appraisal must be scheduled, and if the appraised value comes in lower than the contract price, the buyer can walk away and terminate the contract if they don’t want to come up with the difference in cash. They can also terminate the contract if their loan isn’t approved for some reason.
These timelines are important to be aware of and I’ve just barely scratched the surface about this topic. If you’d like to learn more about these timelines or what to expect during a real estate transaction, give me a call or send me an email. I’d be happy to talk with you!