Congratulations! You have a home under contract and we are entering into our second phase of negotiations. I can see your Pinterest boards filling up with inspiration just waiting for the day you get the keys in hand! But first, we need to get through this stage of the process.
The 10 Day Inspection and Due Diligence Period gives you an opportunity to go through the home with a fine-toothed comb (so to speak). This is your chance to check everything out to make sure you want to stay in the contract and continue working toward closing.
The first 10 days are very busy, especially the first 72 hours. Below you will find instructions to help you along the way and you might want to watch this video, too. These are your NEXT STEPS and they need to be completed within 72 hours:
- Schedule the Buyer’s Inspection: The inspection needs to be scheduled and conducted as soon as possible after all parties have signed the agreement. The inspection usually lasts 1-3 hours, and although you need to call the inspector yourself and set up the date and time, please coordinate the inspection time with my schedule as I will be attending. You do not have to attend the full inspection, but I do recommend meeting with the inspector, at the house, at the end of the inspection. That way, the inspector can go over any items of concern with you in person right away, and you can ask questions. You may also need to have a termite inspection completed. You can check with your lender to see if he/she requires it, if not, it’s up to you if you want to have it completed, but I highly recommend it. If you are going to have a termite inspection it needs to be done the same day as the regular inspection. The inspections will be paid at the time of service so bring cash, check, credit card or arrange to pay through their website or online invoice. Watch this video for more info. Check out this blog post to understand the difference between the inspections and the appraisal.
- Deliver Deposit Money: In the state of Louisiana a deposit is not required, but it is common practice. Once the contract has been signed by all parties, the deposit check will need to be given to the listing agent or the closing attorney. This needs to be a CHECK or CASHIER’S CHECK and needs to be dropped off shortly after all parties have agreed and signed the contract (within 72 hours to be exact) . I will deliver the check personally or advise you when and where to drop it. If you drop off the check please get the receptionist to make a copy of the check with signature, date and time the check was delivered. Please take a picture and text it to me. This check will be held by the listing agent or closing attorney until the time of closing, at which time it will be given back to you or applied to your loan (if you so desire). If you are purchasing a foreclosure, many times the earnest money deposit will be applied to the fees or purchase price.
- Formally Apply for Your Loan: Call your lender today and tell him/her that you got a house under contract and that you need to formally apply for the loan. Right away, the lender will typically ask for your most recent pay stubs, last couple of years’ worth of W2’s, most recent couple of bank statements and investment statements. The lender may even ask for letters of explanation, credit letters, etc. Lenders vary, but these are pretty standard documents they should ask for. The lender may also have you sign a 4506-T form so he/she can access your tax returns. Other things to note about this process: The lender will run a credit report at the time of application and right before closing, so keep up with bills and do not go out and make any big purchases. Make sure you give the lender documents/signatures they request on a timely basis to keep the closing date on track. Fill out the loan application completely – give all info/bank accounts, etc., so there are no delays from the lender discovering new information not originally on the application.
- Get Insurance Quotes: Price these out – Insurance rates & coverages can vary greatly. You can contact any insurance company that you choose, but if you need recommendations visit the resource page.
This may take more than 72 hours but it should be completed within the 10 day time frame. Once you’ve decided on an insurance company you may want to ask them for a CLUE report (this is like a carfax on a car) to see any prior insurance claims that have been made on the property. If you want to view the CLUE report, it should be done during this 10 Day Inspection/Due Diligence period.
- Choose a Closing/Title Attorney: The closing/title attorney will be handling the title work and closing when the time comes. There’s also a possibility that they will hold your deposit check if you chose to put one down. As usual, you have the option to use any closing/title attorney of your choice, you can shop around or if you need names, see the resource page or you can ask your lender for recommendations. On a side note, I’m happy to get title quotes for you if you desire. Just let me know if you’d like me to do that for you.
- Print off this checklist to keep you on track during the next 10 days: Inspection and Due Diligence Checklist
Just in case you want to refresh your memory when it comes to the timeline… Here you go: Contract to Close Infographic