Your property is under contract and that is a significant milestone in the home selling process. However, we are not at the finish line yet. There are still a few hoops to jump through before we are ready to close.
The home sale contract approved for use by the Colorado Real Estate Commission contains five major contingencies for the buyer — contingencies for inspection, title review, insurability, appraisal and loan approval. The buyer has the right to terminate the contract and have his/her earnest money returned if problems arise in any of these areas. All of those contingencies have deadline dates and we will be working to get all the contingencies cleared as quickly as possible.
The good news is that most deals close as scheduled. At the same time, we think it is always good to have a “Plan B” in case things do not go as anticipated. If you are selling the primary residence that you occupy, your Plan B should include:
- Don’t start packing until we have resolved the inspection contingency. This is the contingency that is most likely to cause a contract to terminate. If we have to put the house back on the market, we want it to look as good as possible.
- Don’t call about canceling gas, electric, telephone and other utilities until all the contingencies deadline dates have passed.
- Find out what would happen with your movers if you had to delay or postpone your move at the last minute.
The best tip is to avoid making inflexible plans to use the proceeds of the sale immediately after closing. Give yourself a time buffer in case something goes awry.
The most difficult scenario is a buyer who announces a day or two before closing that he/she cannot or will not close even though all the contingencies have been satisfied. Although you’d be entitled to keep the buyer’s earnest money, such an event would play havoc with your life and would raise many issues:
- Do you postpone your move?
- Can you close on the replacement house you are buying or is that deal also put in jeopardy?
Again, the “failed closing” scenario is fairly rare. But, when it happens, it is good to have given some thought to these kinds of issues. We don’t want to worry you unnecessarily – We’ll do the worrying for you! At the same time, we don’t want you to be unprepared for events that can arise during a real estate transaction — events over which we have no control.