What to Expect Once You're Under Contract to Purchase a Home or Condo?

When purchasing a home or condo in the Santa Rosa Beach area, the first thing to do with your realtor is
to make an offer and get it accepted by the seller. We get a lot of out of town and out-of- state buyers in
our area. The rules for real estate are different in each state. What is customary here on the Emerald
Coast of Florida may be completely different than what they do in Ocean City New Jersey. So make sure
that your real estate agent explains what you should expect through the entire process of purchasing.

Once both parties have agreed upon price and other terms that are within the contract and everyone
has signed the offer is now considered executed. This does not mean that you now can sit back and just
wait for the closing date to come around. Some people say that this is when the real work starts. There
are contingencies made and agreed-upon in almost every contract for the purchase of real estate.
These contingencies have timelines attached to them that need to be followed strictly. We are going to
go over some of the most common things that need to be done after your offer for purchases been
accepted.


EMD – Earnest Money Down or Good Faith Deposit
The first thing that is required by the buyer is to deliver the EMD (earnest money down or good faith
deposit) to the title company. This amount is agreed upon in the offer. In most circumstances, the
customary amount of EMD in South Walton Beach area is between 1% – 2% of the total purchase price.
Depending upon which option was checked in the offer dictates how long you have to deliver the check
to the title company. The EMD or “initial deposit” will either accompany the offer or in most
circumstances will be delivered to the escrow agent within three days of the effective date. Remember,
the effective date is when the last party signed and initialed the purchase offer.

The Inspection Contingency

The second contingency is the inspection contingency. How this is handled depends on whether or not
the home was being offered for sale “as is” or as a regular sale. The inspection contingency most likely
needs to be completed within 15 days from the effective date but sometimes can be as little as 10 days.
These time frames are negotiable but this is what you will come across in most circumstances.

The Appraisal Contingency
The next contingency that most contracts have is the appraisal contingency. Most likely a contract is
only contingent upon appraisal when there is a lender involved. If someone is purchasing a property
with cash they can still request for the sale to be contingent upon appraisal. If the buyer is financing the
purchase of the lender will require the appraisal. If they are paying cash then the buyer would order the
appraisal themselves. In most cases, the contract will be written as follows, “the property must appraise
for equal to or greater than the offer price.”

What if the Appraisal is Lower Than the Offer Price?
When an appraisal comes in lower than the offer price, there are a few things that can happen. What
happens next is negotiable in most circumstances. The first option would be for the buyer to request
that the seller lower the purchase price to the appraised value. The second option would be that the
buyer and seller somehow split the difference. The third option would be the buyer still pays what the
offer price was. The fourth option, which hopefully does not happen would be that the buyer has the
option to just walk away from the entire purchase without penalty and receive his earnest money down
back in full.

Financing contingency
One of the final and most essential contingencies of all is the financing contingency. There are
numerous dates and time frames that can be negotiated in regards to this contingency. For the sake of
not making this section too complicated I’m not going to elaborate too much at this time. There are
different circumstances as to when the buyer would be returned the EMD without penalty if funding
were to “fall apart.” As long as the dates outlined in the offer are followed the buyer will be protected
from losing their deposit.

In conclusion when either purchasing or selling real estate whether it be a home in Blue Mountain Beach
or a condo along 30a there is plenty of work to be done after the property is under contract. This is not
the time to kick back and relax. Once the property is under contract, this is wh “en the stopwatch starts
ticking, and stress levels can get high. With a dependable realtor and a top-notch title company like
Setco Services, the process seems to go much smoother and streamlined. The best advice may be to
keep your eye on the prize, work together with all parties involved and make the transaction a win-win
for everyone. After all, the buyer wants to purchase the property, and the seller is looking to get it sold.
If any problems do occur while under contract try to continue working toward the ultimate goal -getting
the property closed.