What Sellers Need to Know Right After Contract Ratification
Updated: Jul 28
So you're under contract with a buyer! Now what?
You may want to refer to the Responsibilities & Inspector Options Including Deadlines Spreadsheet along with the below:
Real Estate Information Network Standard Purchase Agreements
Who is Ordering Inspections Options Seller is in Charge of?
The buyer's agent will be coordinating with me shortly regarding additional inspections that they are in charge of. It's generally best for occupants to not be present during inspections. Situation A: Seller not Ordering any Inspections out of wood destroying insect, wood destroying organism, septic, well, or survey
Situation B: Seller Is Ordering Some Inspections Themselves out of wood destroying insect, wood destroying organism, septic, well, or survey
Situation C: Seller In Charge of Some Inspections out of wood destroying insect, wood destroying organism, septic, well, or survey, Has Agreed to Release Listing Agent/Listing Firm from Liability if Problems with Companies w/ Listing Agent Ordering Inspections
I typically am the one to reach out to inspectors and I'll be presenting you with options based on cost and timing. That said, I have heard of horror stories & on 1 occasion encountered a scenario myself where a buyer held an agent personally and financially liable for an inspection that they felt went bad. If that's the case, please let me know, as it would be best for you to choose your own inspector as I would not want to take on that liability when I am not the one doing the work myself with only an informal business referral relationship with inspectors with nothing for me to gain besides wanting to help you get the job done.
Wood Destroying Insect AND Wood Destroying Organism Inspection Duration
Wood destroying Insect AND moisture inspections (2 separate inspections, 2 separate reports, typically by the same company at the same time) typically take between 15 minutes to an hour for homes <2k sq ft, 30 minutes-1.5 hrs for homes 2k-4k sq ft, & 45 minutes- a few hours for homes larger than 4k sq ft. They can take significantly longer for slab properties vs crawlspace properties of the same square footage. Also sometimes there are 2 man termite/moisture teams. Also homes with overgrowth adjacent to the foundation cause it to take longer and properties where access to the crawlspace is difficult take longer.
Inspections Seller Ordering w/ <30 days to close
While it could mean 2 termite/moisture inspections are required in the event that this contract falls through, it's typically best to order the termite/moisture inspection now even if the buyer has given us a long window to order wood destroying insect/wood destroying organism inspections. If we wait until after the home inspection contingency has been removed to get those rolling, it decreases the chances of needing to do 2 inspections, but if the buyer asks for items in the inspection repair requests that include termite/moisture items, the tight deadline on those could cause problems.
Personal Property In Home
In an ideal scenario, it's best to not move out any personal property from the home until the buyer is "clear to close" which occurs only 3 days prior to closing in some cases. If you're unable to move items within that time frame, you can move them out earlier, but you run the risk of de-staging a house only for it to come back on the market. I have seen where a buyer was in breach of contract and pulled out of the contract the same week that a property was supposed to close before (the seller I was representing did receive the earnest money deposit). Besides home inspection contingency removal, potential problems can include low appraisal (buyers typically have their EMD returned, but it depends on the contract), the buyer losing their job in between contract ratification & closing (the buyer had their EMD returned), etc.
If Home Inspection
It's also a good idea to have the home in show-ready shape on the day of home inspection. Sometimes sellers let the place go between the 1st showing and the time of the home inspection, and I have seen where that can give buyers a bad impression & encourage them to walk, even though you might think it wouldn't have an impact to be a little messy that day if no damage has occurred. Please make sure that all closet/storage areas as well as main systems like water heater and HVAC are accessible without the inspectors needing to move any personal items.
If occupied:
While it depends on the inspector(s), the condition, what is included in the inspection, what type of inspections are included & the size of the inspection team, home inspections typically take between 1.5 and 3.5 hours for properties <2k sq ft, 2-4 hrs for properties 2k-4k sq ft. 3-6 hrs for properties 4k-6k sq ft, & 3.5-10 hrs for a property 6k sq ft+.
If Utilities On
It's also important that you make sure to not have the utilities turning off until at least the day after closing, if not later, & I don't suggest requesting that until we are at the point where the buyers are "clear to close".
If HOA/Condo Association
If you don't already have them back from requesting them prior to listing the property, it is generally best to request the HOA &/or Condo docs now rather than waiting until after the Property Inspection Contingency Removal Addendum has been consummated. Usually, those are produced within 2 weeks of requesting them, but there are some exceptions where it can take even longer & there's often an option to expedite them to arrive sooner. Also, if we don't request them now, until they have been sent to the buyer and 3 days have passed since when they are received by the buyer, a buyer has a valid excuse to walk out of the contract even after you have made plans in the future and made repairs in the likely event that the buyer requests repairs and an agreement is reached. In some cases these will not be able to be transferred and an additional expense will be necessary if the buyer walks out of the contract for any reason, but it's better to get this provision out of the way sooner rather than later.
REIN MLS Active Contingent Status
If any contingencies are present, within 2 business days of ratification your property will be put into active contingent status by the MLS coordinator at GRP. You will likely be unable to see that it's under contract online after that shift unless looking for a contingency on Rein.com , but don't be alarmed. With the REIN MLS rules the property will be in that status until any contingencies (i.e. home inspection) have been removed.
If Contingency Present & in WBG MLS &/or CBRAR/CVR MLS
If any contingencies are present, we also used the forms necessary to have similar status in other MLS to better market the property while under contract. That status means that most agents won’t make requests for showings.
Allow Showings if Contingent
If we receive showing requests, I typically do recommend accommodating them just in case of contract fall through etc.
If Appraisal Contingent
If an appraisal occurs depends on whether or not it's in the contract for cash deals. For financed deals, it's typically included in the contract, but sometimes buyers can waive appraisals, depending on the borrowing institution & other factors like down payment used (i.e. 20%+) & debt to income ratios. If the borrower is putting down less than 20%, I haven't heard of appraisal waivers before.
When the appraisal gets ordered for financed transactions depends on the contract type used.
With the Real Estate Information Network Inc. Standard Purchase Agreement, the contract stipulates on page 2-3 section 6 A i (as of 7/03/23 version), "Unless otherwise indicated below, within seven (7) days of ratification of this Agreement, Buyer shall... authorize & pay for... appraisal... If this Agreement is contingent on any inspection of the Property in paragraph 14D, the deadline for Buyer to authorize the lender to order the appraisal is extended to three (3) days after removal of the Property Inspection Contingency."
With Virginia Realtors® Residential Contract of Purchase, the default contract stipulates on page 2 section 4 a 2 (as of the 7/23 version), "Purchaser agrees to make written application for such financing or assumption (including the payment of any required application, credit, or appraisal fees) within five (5) business days of the date of acceptance of this Contract and to diligently pursue obtaining the Commitment..."
There are some items involved in the contract ratification not shared in detail here, such as tasks your agent is completing & price changes in certain situations immediately after contract ratification based on sales price, that are often, but not always, best detailed within an email following contract ratification.
If you have any questions, feel free to let me know.