There are over 30 deadlines in a real estate contract, but not all are necessary for the sale to crystallize into a binding contract. Some of the major deadlines include the seller’s disclosure, due diligence, appraisal, and settlement deadlines.
Here are five important real estate purchase contract deadlines that every home seller should keep in mind.
1. Seller’s disclosure deadline
The seller’s disclosure statement is a vital deadline, as it is one of the first pieces of paperwork that a buyer making an offer on your property will receive.
The property disclosure is generally completed before the property is listed for sale. It entails information the seller has about improvements, outstanding liens against the property, and any major repairs or known issues with heating, plumbing, and electricity.
It is important to provide a valid property disclosure because lying on your seller’s disclosure can lead to lawsuits. The seller’s disclosure deadline is 1–3 days from the date of the mutually executed contract.
2. Financing deadline
Seller or private financing is only applicable if the buyer plans to pay a portion or all of the price with seller financing.
The seller has to deliver the proposed seller financing documents to the buyer, and the buyer must decide on or before the date of the financing deadline if the proposed financing offer is acceptable.
The financing deadline is usually 21–25 days after the mutually executed contract.
3. Appraisal and Inspection Deadline
Most buyers typically include an appraisal and inspection contingency in their offers. This is because the buyer will not want to overpay for a property over its current market value and will want to ensure that the property is in satisfactory condition.
The buyer must provide the appraisal before the contract can move to settlement. In a complex commercial transaction, for instance, the information collected by a commercial title company employed by the buyer will verify the title and current property expenses, which can be used to determine the documents required to close the transaction.
The buyer may object to the transaction after the appraisal if the purchase price exceeds the valuation of the property. The buyer and seller must agree before moving to the next stage. The appraisal deadline is set for 18–21 days from the date of the contract.
4. Due diligence deadline
The seller must deliver the relevant due diligence documents after accepting the offer. The buyer is then given 5-7 days to review and object to any aspect of the contract.
Both parties must come to a resolution and provide a solution to the issues found during due diligence. Where there is no resolution, the contract will be revoked.
5. Settlement deadline
The settlement phase of selling a home is also known as “closing.”
Here, the buyer and seller have agreed to all necessary terms in the contract and can sign the documents to seal the transaction.
Selling a home involves a tremendous amount of paperwork and the dreaded presence of deadlines. Most of the paperwork can be complex and overwhelming, especially if you’ve never dealt with this area of real estate transactions before.
Deadlines all serve important roles in the negotiation process of selling your home. Failure to meet these deadlines may cause the contract to be terminated.