If you have recently signed a deal on your next dream home, you may be wondering what happens next. Even seasoned home buyers tend to forget the process in the time since they purchased their last property, and a reminder can be helpful.
Let’s look at 4 of the most common steps that immediately follow a home purchase.
Step 1: Buyer Makes Deposit
Most often a buyer will have 24 hours following a signed deal to make the initial deposit on a resale home. This is not to be confused with a down payment, which is handed over on closing day.
The deposit is made to show good faith on behalf of a buyer. It is meant to indicate one is serious about the property. It is, in fact, a requirement once a deal has been agreed to; all buyers must provide a deposit.
The amount of a deposit will depend on what was negotiated, however it often amounts to somewhere in the neighbourhood of 5% of the purchase price of the property.
In terms of when the deposit must be made, this again will depend on the terms of the deal. Oftentimes buyers will indicate a deposit is to be provided “upon acceptance” which means within 24 hours. Other times, buyers may need a few days to secure the funds, and this would be noted in the agreement.
Note that deposit requirements by home builders on new homes follow a different protocol and are outside the scope of this article.
Step 2: Clear Conditions
If your home purchase was subject to any conditions, you will use the coming days to complete whatever due diligence is needed to satisfy those requirements.
For example, you may have included a financing condition in your offer and need time to work with your bank to confirm the funds are in place.
A home inspection condition is another common clause for a buyer to include. In this case, you would work with your REALTOR® to schedule an appointment with a home inspector to perform this inspection.
If you have purchased a condominium and made the deal conditional on the status certificate, you would use this time to have your real estate lawyer review this document to ensure all is well.
Once you are fully satisfied that the home meets your requirements and the funds are in place, your REALTOR® will present you with a form to sign that indicates you have fulfilled your conditions and these clauses no longer stand in the way. At this point you now have a firm deal since your conditions have been cleared.
Step 3: Walkthrough
Once you have cleared your conditions, you will likely be ready to start taking measurements to determine where your furniture will go. Or you may simply want to show family members your new purchase.
It is likely your real estate salesperson has included in the agreement one or more visits to the property before closing. This allows a buyer to view the home from the lens of a new owner, and begin to imagine how the space in the house may be used.
The duration of the walkthrough visit is usually one hour, however this will depend on what terms were included in your specific deal. Just get in touch with your REALTOR® to schedule the visit and try to provide a few days’ advance notice out of courtesy to the seller (who - like you - will be busy packing boxes and getting ready to move).
Step 4: Completion Date & Keys
There may be weeks or months between a firm deal and your closing date. It varies depending on the terms of the deal a buyer and seller agreed to.
During this interim period your real estate lawyer will be working with the lawyer representing the home seller, the real estate brokerages, and the lender or bank to ensure everything is ready for closing day.
Together, the lawyers work together to coordinate the money and the paperwork so that on closing day, ownership of the property is transferred into the buyer's name(s) and registered with the Land Titles office.
A few days before completion, your lawyer will schedule a meeting for you to sign the required documents and provide a bank draft for closing costs, if applicable. If you have sold one house to purchase another, the funds used in the sale can normally be redirected to the purchase quite seamlessly by your lawyer.
Then, on the much-anticipated closing day you will be notified by your real estate lawyer when you have completed the transaction. This signifies that the transfer of ownership has been executed and you are the new registered owner of the property.
The home is now yours!
It’s likely you will be given the code to the lockbox on the front door of the property; this will be how you enter your house for the first time.
It’s customary for sellers to leave all other sets of keys, garage door openers, FOB’s, and appliance manuals in the kitchen for the new owners. Then, in the coming days the listing agent working on behalf of the seller will drop by the house to pick up their lockbox from the front door.
Most closings are now handled this way, particularly since COVID. In prior years, keys were often picked up on closing day from your real estate lawyer’s office. We think the lockbox method is a huge improvement!
If you have any questions about your home purchase, your REALTOR® will be on standby to help you. If you have not yet purchased your next house but would like some help, reach out to us today.***