To start, having your offer accepted in the competitive San Francisco Bay Area real estate market is challenging. Being in a job and tech mecca has led to a dense population that has resulted in a sellers’ housing market. Simply put, there are more buyers than homes available. The majority of residential properties are on the market for an average of 10–14 days combined with a scheduled offer date to traffic all interested parties to one single bidding date. Properties often receive multiple offers.
During the home-shopping period, buyers might get their offer accepted on the first try, or it might take a few attempts before landing the winning offer.
So, you just got your offer accepted! Now what?
“Now what?” is a common question that buyers ask. At least it’s often on their mind. Emotions range from super excited to oh my this is really happening now to now, what do we do?
Here is a generic outline of what to expect after your offer is accepted.
Your Offer Was Accepted. Now What?
Now the purchase enters the Escrow Period. This is the time period from when the offer is accepted to when the buyer becomes the new owner and receives the keys. The Escrow Period is the processing of the transaction.
Based on a regular 30 day escrow period:
Day 1
- EMD (Earnest Money Deposit): The financial terms of the purchase agreement will require the EMD to be submitted within 1–3 business days. This is commonly 3% of the purchase price. Aggressive buyers might commit to submitting their EMD within 1 business day to help appeal their offer to the seller. The financial terms will be in Paragraph 3 of the CAR purchase contract, and Paragraph 1 of the SFAR purchase contract. The EMD will be sent to the escrow/title company that will be facilitating the transaction. This kicks off the transaction.
- Loan Process Initiated (if using a loan): At this stage, the buyer should already have a pre-approval from their financial institution. In the Bay Area, many sellers won’t consider an offer without a pre-approval or qualification of ability to purchase the property. After the offer is accepted, the buyer's agent will forward the ratified purchase contract to the lender. Then the lender can order the appraisal, and begin processing the loan. Buyers will also begin liquidating any assets for their down payment.
Cash Offers: buyers will liquidate funds to complete the purchase.
Day 2–15
- E-Sign the Disclosure Package: In the San Francisco Bay Area, the disclosure package is provided upfront after viewing the property. Sometimes, the full disclosure package will be signed with the offer submission. Other times, only the cover page will be submitted with the offer. In which case, the full disclosure package will need to be signed. If other disclosure items are added afterward, then the buyer will have an allotted number of days to review them per the purchase contract.
- Execute Contingencies (if applicable): If the offer included any contingencies (for example the Inspection, Loan, & Appraisal Contingency), this is time to perform inspections and other due diligence for the buyers to fully satisfy themselves with the home purchase. If any of the contingencies fail, then the buyer has a safe exit to cancel the contract, and get their EMD returned to them. It’s common in the San Francisco Bay Area for buyers to waive all contingencies with their offer, in which case, there would be no contingencies to execute here. If all of the contingencies pass, then the buyer will remove the contingencies and continue with the purchase.
- Appraisal: Going back to Day 1, the lender ordered an appraisal, and on average appraisals happen within 5–14 days. The appraiser will assess the market value of the home for the bank to verify that the buyer is not overpaying for the property. The appraiser will review comparable sales, take a walkthrough of the property, take measurements of the property to verify square footage, and often learn how many offers were received. An appraisal report will be sent to the lender required to process the loan.
Cash Offers: there is no appraisal.
Day 20–25
- Final Loan Approval: When the lender has finished processing the loan, the file will get Cleared For Closing (words we get very excited to hear!), and the buyers will be sent a Closing Disclosure, the CD. This breaks down the details and obligations of the loan. There is a mandatory 3-day period for the buyers to review the CD before the final closing procedure.
- Final Walkthrough: After the staging items have been removed, buyers will have an opportunity to do a final walkthrough to verify the property is in substantially the same condition as it was when they offered on it.
Day 25–30
- Down Payment + Closing Costs Due: The escrow/title company will send a balance sheet with the remaining balance due to close escrow including the down payment (minus the EMD already submitted), and closing costs. The buyers will submit this as step one of the final closing procedure.
- Sign Closing Documents: An in-person appointment for the buyers to sign closing documents with the escrow/title company. Closing documents include title, escrow, loan, and supporting documents to turn the property into the new owner's name that will be required to record the transfer with the county records. (Stretch those hands!).
Cash Offers: can often sign closing documents electronically.
Closing Day!
- Recording: This is the final step!: The escrow and title company will deliver closing documents to the county recorder's office and will record the property to the new owner's name(s).
- Get the Keys: After escrow and title send confirmation that the new owners are “officially on record”, then the buyer meets with their agent to get the keys and Celebration!
Buyers may also present an offer with more aggressive terms including a shorter closing period, for example, 14–21 days. Cash offers can close as soon as funds are ready and contingencies (if any) are cleared.
This is a generic model based on the regular 30 day escrow period in the San Francisco Bay Area market. Other counties, locations, local conditions, and terms may vary.
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