You’ve submitted the offer – now what?

 man's hands, signing papers

If you’ve been suffering from insomnia or – worse yet – have recurring nightmares of being buried under a house, ala  L. Frank Baum's wicked witch of the east, congratulations! You’ve signed an offer to purchase a house. Though your signature may be shaky and sweat drops dot the contract, it is valid, so grab those ruby slippers and get ready for the adventure of a lifetime.

Let’s take a look at some of what happens as the ink dries on the contract.

Behind the scenes

Your real estate agent will call the listing agent to let him know she has an offer on the house. How the offer is presented varies by region.

In some parts of the country the listing agent collects the offers and presents them to the seller. In others, the buyer’s agent is able to present the offer directly to the seller and his agent. The latter is the best scenario, especially if you have an experienced, negotiating-savvy agent.

At any rate, the seller will entertain your offer and do one of three things with it:

  • Accept it – in this case you immediately get to work on your part of the contract’s duties.
  • Counter it – he may submit a counter offer with a different price or different terms or both. In this case he will give you a time limit in which to respond.
  • Reject it – the seller finds your offer distasteful, in either price or terms and has no incentive to counter it. Typically, this is because either the buyer has lowballed the offer into oblivion or the seller has other, better offers. Your choices here are to move on to find another home or submit a new offer at a more attractive price and/or terms. Don’t be surprised, however, if the seller has accepted another offer in the meantime.

If the offer is accepted, escrow opens and the clock starts ticking.

Let’s look at some of your duties during the escrow period.


Remember all those dates your real estate agent asked you to set? When do think you’ll have loan approval? When can you have the home inspection finished? Will you be ordering a pest, roof, electrical, well, and septic or any other type of test? All of the date-related items are known as contingencies, as well as anything else in the purchase agreement that basically says “when/if x is completed or comes to pass, I’ll consummate this contract.”

As your real estate agent most likely informed you, contingencies are important. You must perform the activity required by the date specified and then formally remove the contingency, which is something your agent will do for you. If you aren’t working with a real estate agent, I don’t know what to tell you – except maybe, good luck.

Your part of the process includes staying on your lender to ensure that the loan is approved by the date specified, ordering the inspections and performing any other of the duties set forth in the contract.

If something happens – say your lender needs more time – talk to your real estate agent. She can ask for an extension of the time allowed so that you don’t “fall out” of contract.


In the course of approving your loan application, the lender will send an appraiser out to the house to determine its current market value. Either the seller’s agent or your agent should be present, armed with “comps” and other information, for the appraisal.

The very worst thing that can happen, aside from the home inspector discovering that the house needs $1 million dollars in repairs, is a low appraisal. No lender will loan an amount higher than that for which the home is valued and it’s up to the agents involved to ensure this doesn’t happen.

In all fairness, under some circumstances there is nothing the agents can do about it. But if both agents came up with a similar value for the home, the appraiser should too. If not, the agents need to show him where he might go wrong before he submits his appraisal to the lender.

Your part of this process is easy if the appraisal meets or exceeds what you agreed to pay for the home. If it doesn’t, you’ll need to make some decisions:

  • Come up with more cash
  • Ask the seller to lower the price
  • You contribute half the cash needed and the seller the other half
  • You walk away from the deal

Typically, the seller needs to remedy the situation, but not always. Your real estate agent is your best source of information and ideas should you be faced with a low appraisal.


Once all the contingencies are removed, you are fully committed to purchase the home. Most of the work from then on goes on behind the scenes, with the title company ensuring there isn’t a cloud on the home’s chain of title, the lender ensuring your credit and risk factor is the same as when you applied for the loan and both real estate agents keeping track of all the paperwork.

Before closing, you have two more tasks: you’ll need to shop and pay for a homeowner’s insurance policy and you will need to participate in the final walk-through of the house. The walk-through is to ensure that the home is in the same condition as when you agreed to purchase it and that all agreed-upon repairs have been completed.

This is a very brief overview of the home-buying process but it should give you an idea of what to expect and, hopefully, help you sleep better at night. Don’t forget to remove the ruby slippers, though, before slipping beneath the covers. 

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