When you walk into the house of your dreams, it should feel comfortable and peaceful. It should feel like home.
We want every step of the home-buying process to feel like that â€" intuitive. After all, so many people do it; In 2021 alone, 6.1 million home transactions occurred. Yet the fact remains: It's a burdensome process that so frequently goes unexplained until you're in the middle of it.
Once the offer on your dream home has been accepted, you might think the hard work is done. But that's just when the hard work begins.
What's next? We're here to give you a primer before you find yourself immersed in a world you don't understand.
How Long Does it Take to Close on a House?
The time it takes from when you make an offer and close on the home can vary quite a bit depending on where you live and the seller you're working with. Here's a typical timeline.
Sellers Take up to Three Days to Respond to Your Offer
'Buyers typically make an offer to the seller through a real estate agent in a document called a letter of intent,' said real estate attorney Rajeh A. Saadeh. 'Most offers have an expiration date within the letter, but either way, buyers usually receive responses from sellers within one to three days.'
Since responding quickly is seen as a common courtesy, you should expect to hear back from your seller (or their agent) with an acceptance, counter-offer, or rejection by the third day. There are some situations in which a seller may take longer to respond, which we'll explain.
What Happens After Your Offer is Accepted?
Once your offer is accepted, you'll typically have three days to make what's called an earnest money deposit, which acts as proof to the seller of your intent to buy the home. This usually ranges from 1-3% of the sales price but can go up to as much as 10% in a competitive market or a bidding war. The money is generally applied to the total down payment or closing costs.
What follows is a series of formalities that can bring forth their own set of complications: the home inspection, receiving loan approval and â€" the final step â€" closing on the home.
You'll Need an Inspection
Real estate contracts are generally contingent on passing certain hurdles, so a hiccup in one of those can affect whether you close on the home. For example, many real estate contracts are dependent on a home inspection. If the inspection turns up unexpected problems that make the buyer wary, they generally have a certain amount of time to vacate the contract. Contracts can also have contingencies on a title search, ensuring that the seller is the rightful owner, and on mortgage approval, among other factors.
While real estate agents are supposed to shepherd the buyer through the process, it's still important to understand what each step entails. When it comes to a home inspection, it's a good idea to enlist a trusted third party home inspector even if the seller has provided you with a prior inspection report. Â Home inspections usually take several hours and range from about $300 to $500, according to Fixr. Before choosing an inspector, it's important to research the various types of home inspections available, including a standard inspection, roof inspection, plumbing inspection, structural inspection and pest inspection. Based on common problems in your area or any issues in your home's past, it may be a good idea to tack on a few specific home inspections in addition to a general report.
Get Your Loan Approved
Once the inspection is finished, your next step will be to ensure your loan is approved. Before purchasing a home, buyers can submit a pre-approval letter from a lender showing how much the buyer is qualified to borrow. But this does not mean that the loan is in hand. Instead, the lender now needs to review in full the buyer's informationâ€"along with the underwriting teamâ€"and ensure that the loan can still go through as planned. The home appraisal is an important part of this process: lenders will require that an unbiased appraiser determine the home's value and ensure it is in line with the sales price. Just like an inspection, an appraisal costs moneyâ€"in fact, it can cost between $300 and $450, usually paid by the buyer. If the appraisal comes in lower than the sales price, the price will either have to be lowered or the buyer will have to pay more upfront.Â
One thing is certain: the process moves fast. Almost every week brings with it a new challenge.
'If your offer is accepted, the sale process begins, a deposit is made within three days, and inspections and appraisal are typically completed within 17 days,' says broker Brandon Brown. 'Loan approval is then completed before 21 days, with the closing of the property happening around day 30.'
But that is the low end of the timeline. Closings usually range from 30 to 45 days after going under contract. The average time to close a house purchase was actually 50 days, according to September 2021 numbers.
What Happens at Closing?
Once your lender has given the final loan approval (and produced the corresponding documents), they'll be ready for your signature. Before COVID-19, signing typically happened with all parties (buyers, sellers, real estate agents and notaries) present. But with more transactions happening remotely and mobile notaries becoming more common, getting everything signed and notarized might take a little longer.
When all of the required documents are finally signed, they'll be sent back to your lender for one more review, at which point the funds to purchase your new home will be released and a title will be generated. This title officially transfers ownership of the property from the seller to the buyer, and once it's in place, the home is legally yours.
Somewhere between getting all your paperwork in order and ready to be signed, you may decide to do a final walkthrough. This step is usually more of a formality, but it also guarantees that the home is in the same condition as the day the offer was made â€" and it's worth doing, especially if you have any outlying concerns.
Haven't Heard Back on Your Offer?
Sometimes, sellers can go much longer than three days before responding to an offer. There are a few reasons for this.
Sellers May Get â€" or Want â€" Multiple Offers
If a seller receives a lot of offers, this can delay their response time.
Saadeh pointed to an offer made on a Friday during a weekend with an open house. In that case, the seller may want to wait.
'Sometimes a seller may want to hold off on responding to the offer to see if other offers may come in,' he said.
The same could be true if the seller has upcoming tours that they think might result in a competing offer.
So while it isn't considered good practice to leave buyers hanging indefinitely, a seller may not get back to you ASAP.
In a competitive market, it's a good idea to make sure your offer has an expiration date, ensuring that the seller must respond within a certain amount of time or the offer no longer stands.
What to Do if Your Offer is Rejected or Countered
If your offer is countered or rejected, you have a few options.
'If the seller counters, then the buyers have to decide whether to accept the seller's new terms, or counter back and continue the negotiation until an agreement is made,' Brown said.
In the case of a rejected offer, you'll likely want to start hunting around for a new house. But if you really love this home in particular, you can talk with your real estate agent about making another offer on it.
'If the offer is rejected, usually the conversation ends,' Saadeh said. 'But the buyer can make another offer if they so choose.'
At this point, the seller will again either accept, reject or counter your offer. Since sellers aren't under any obligation to respond to offers at all, it's possible they even ignore your offer â€" especially if it's an unappealing one. If that happens, chances are you just didn't make a compelling enough bid.
Here are a few ways to avoid having your offer ignored.
How to Make a Competitive Offer
Since you'll rarely find yourself in a situation where you're the only interested buyer, it's important to know how to make a competitive offer. One of the most common reasons offers are rejected or ignored is when they're perceived as shockingly low. But there are other reasons a seller might disregard or reject your offer.
'Even a higher offer may be less likely to be accepted by the seller if the buyer is asking for too many concessions or for the seller to pay for things that aren't typically seller-paid in the contract,' says Scott Trench, CEO of Bigger Pockets. This might include things like getting the home surveyed and appraised, which are usually considered buyer expenses.
'Closing cost concessions requested by the buyer can pose an issue because they cut into the seller's net profits,' Trench said. 'Asking the seller to pay for things they normally wouldn't may result in the seller choosing someone else's offer over yours.'
Another reason sellers might say no thanks? If it doesn't seem like you're a serious candidate.
'Sellers want to know that you can close,' Trench said.=. 'Include a copy of your pre-approval letter, or go one step further and have your lending officer call the seller's agent and let them know how qualified you are.'
Find out what matters most to your seller, and you'll be one step closer to making an offer they're willing to accept.
Home-Buying FAQs
You can expect to receive a response to an offer within one to three days, but it's best to include an expiration date with your offer. This ensures that sellers realize they have to respond within a certain amount of time or the offer is no longer valid.
Remember that there is a lot more that goes into an appealing offer than just the sale price. Sellers may want a quick closing, cash versus a loan or a waived home inspection. Having a solid rapport between the seller and the buyer's real estate agent will make a difference.
So you've gotten your offer accepted. Congratulations. Now is the hard part. The closing process on average tends to take between 30 and 45 days, but it can take as much as 50 days or more. Be prepared for the unexpected.
First, budget accordingly. Home inspections on average run between $300 and $500, but they can be even higher depending on how many you elect to have. This is an important distinction: depending on where your home is located, what previous problems it had and what your insurance requires, you may need to pay for inspections with a specific focus. This could include a roof inspection, a pest inspection or a structural inspection. While these inspections can save you money in the long run, they can be expensive in the moment.Â
If you plan to pay for your home purchase using a loan, then you'll have to have an appraisal, required by the lender. The appraisal generally runs between $300 and $450 and is paid for by the buyer. The appraisal is meant to prove to the lender that the house is actually worth its listing price. But if an appraisal comes back with a number lower than the sales price, the seller will either have to lower the price or the buyer will have to make up the difference in their down payment.Â
Closing day largely means signing documents and ensuring that your down payment and closing costs have been transferred to the seller or their appropriate source. Shortly before the closing, you'll receive a closing disclosure that will go over the final totals. It's important to review that document before closing day in case anything is different from initial tabulations.
Contributor Larissa Runkle frequently writes on finance, real estate, and lifestyle topics for The Penny Hoarder.
Writer Elizabeth Djinis is a contributor to The Penny Hoarder, often writing about selling goods online through social platforms. Her work has appeared in Teen Vogue, Smithsonian Magazine and the Tampa Bay Times.
This was originally published on The Penny Hoarder, which helps millions of readers worldwide earn and save money by sharing unique job opportunities, personal stories, freebies and more. The Inc. 5000 ranked The Penny Hoarder as the fastest-growing private media company in the U.S. in 2017.
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