How Selling Works, Part 9: From Mutual Acceptance to Closing Day

Last time, we talked about negotiation. Terms, contingency responses, timelines and deadlines.

Now, you're through that. You and the buyer have landed on a deal you're both comfortable with. The counteroffers are signed, the price and terms are locked in… you have “mutual acceptance.”

At that moment, actually at the moment the final set of initials on the Purchase and Sale Agreement are delivered back to the other broker’s firm’s email address – to be technical – the clock starts ticking.

The Clock Starts Ticking

Real estate is a time-compressed set of a LOT of events that must unfold, by their respective deadlines, some in sequence and some in parallel, and with a key principal underlying them all:

“Time is of the essence.”

That means if a deadline for a contingency – defined as, a condition that must be satisfied in order for the deal to move ahead – is 9:00 PM on Tuesday, then at 9:01 on Tuesday it’s too late.

Part of my job and my team’s job as your Realtor is to keep you and everyone involved on track and on time.

Your Transaction Calendar

To help with that, one of the very first things we do after mutual acceptance is create a one-page summary of the Purchase and Sale Agreement, with all its parties, terms, deadlines and such boiled down into a one-page document we call a Transaction Calendar.

That calendar, along with the actual Agreement, is sent to:

You the seller
The buyer’s agent and their firm
Title and escrow
The lender if the sale is financed
Any other involved parties such as an attorney if it’s a probate sale that requires it, or a 1031 intermediary if you’re doing a tax-deferred exchange, etc.

(Don’t stress for two seconds if you don’t know what those are… they’re for very specific types of sales.)

That calendar is the perfect reference document when you need a reminder of “who will do what by when” throughout the sale.

Meanwhile, the buyer’s first couple steps are to deposit their earnest money with escrow (usually due no later than 2 to 3 days after mutual acceptance.)

And also to get their home inspection scheduled, sharing the date with us so we know when that 3-ish-hour visit is going to take place.

We Have to Sell Your House Three Times

I tell sellers, “We have to sell your house three times. First to the buyer. Second to the inspector. And third to the appraiser.”

We did a lot to get your house looking tip-top for the buyers to have that emotional experience that led to them making the offer.

We want the inspector and appraiser – even though their work is allegedly “objective” – to have that same emotional experience, a POSITIVE one.

It’s a bit of a dance as you’re trying to pack up and move, but nonetheless you want to do your best to have the house and grounds “show ready” for those appointments.

The Home Inspection

The inspection is first, and we’ll get a formal “Inspection Response” before that contingency’s deadline.

My advice to sellers is to expect SOMETHING to get called out. No house is perfect and inspectors are very good at justifying their existence by finding things.

The buyer, then is LIKELY going to ask for SOMETHING from you – a repair, a monetary credit, or both.

We will have done our best to mitigate the degree of “issues” either by repairing them, getting bids for them, and/or disclosing them.

When we disclose that there are several windows with failed vacuum seals, and that the water heater is 12 years old and still working, we essentially say to the buyer, ‘We know these things, and they’re factored into the price.”

The buyer is going to come up with a list of what they think is fair to ask for, and they’ll deliver it to us in writing. We then have 3 days to respond.

I’ll talk you through that, whether we reject, accept, or counter – just like when the original offer was made.

There is no formula, no hard and fast “we do this every time” answer here, it always depends on the greater context of the deal, the house, the repairs, your needs, etc.

Next Up: The Appraisal

We ultimately reach mutual acceptance on the inspection contingency, and we then wait for the appraiser to visit and deliver their report to the buyer’s lender.

We will typically get a call a week or so after the appraisal visit that “the value is good, on to closing.”

If the message is, “Appraisal came in low,” then we have yet another round of negotiation.

And again, whether we contribute, eat the full amount, or reject any offers of help depends on the greater context of the deal, the market, the circumstances and your needs.

What Title and Escrow Are Doing in the Background

In the background, title and escrow are doing their work:

The title company is assembling the “paper history” of the property, all the past recorded documents like utility easements, CCR’s, liens like mortgage payoffs or tax liens, and making sure the title is insurable.

They’ll ultimately send us that report to review ourselves.

The escrow company is handling the money version of that research: getting mortgage payoff statements, utility balances, taxes, homeowner’s association dues, realtor fees, excise tax, etc.

The escrow officer is making a ledger – a settlement statement – that will show you the seller exactly what your expenses and bottom line will be, and the money due from the buyer to close on the sale.

The Final Stretch

With the inspection, appraisal, title review, and any other contingencies behind us, you are by now mostly packed up and living in the house on minimal furnishings and such.

Then, several days prior to actual “closing” we’ll get a call from escrow: time to go in and sign closing documents.

As a seller, that appointment doesn’t take overly long – as quick as 15 or 20 minutes.

Closing Day: You Are SOLD

With everything signed by both you and and the buyer (they have their own, separate appointment), when the actual closing date arrives the title and escrow company send a courier to the courthouse to have the documents officially recorded, and presto: You are SOLD and no longer the owner.

That same day you can either pick up a cashier's check from the escrow desk, or a wire transfer of your proceeds will land in your bank account – whichever option you chose during your signing appointment.

Some sales involve “delayed possession” meaning that might remain living in the home for a few days or longer, technically as a “tenant.” That would have been negotiated in the Purchase and Sale Agreement.

Most of the time, however, the buyer gets the keys to your house on the day of closing, and starts their move-in.

And That’s the Steady March to Closing

As long as this post has been, there are certainly a number of smaller details that also fill in the gaps, e.g. the buyer’s final walk-thru, the level of cleanliness expected for the hand-off, the need to maintain the house if any new repairs become necessary…

But this should give you a good overview of the major steps involved after the “mutual acceptance” is reached.