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Under Contract: Understanding the Home Sale

So, you've invested significant effort into setting up the perfect open house, completed all your marketing tasks, and even found yourself in a bidding war. Now, you're at the crucial stage where you've accepted an offer and entered into a contract. In California, the process of being under contract and pending in the Multiple Listing Service (MLS) can be a bit complex, and there are important contingencies to consider. Let's break it down.

Under Contract vs. Pending: In California, when you've accepted an offer, your listing status changes from "active" to "under contract." During this stage, you're still open to accepting backup offers, and the deal isn't set in stone yet. This period allows the buyer some time to conduct due diligence.

Contingency Time Frame: Within the under-contract stage, there's a discovery period, typically lasting 17 days. During this time, the buyer can decide to walk away without consequences. This period includes two significant contingencies:

  1. Inspection Contingency: Buyers can bring in inspectors (e.g., home, plumbing, electric, HVAC) to examine the property. Based on the inspection results, they may request a seller credit, ask for repairs, or proceed without changes.

  2. Finance Contingency: Most buyers require a loan, and this contingency gives them time to secure financing. Issues like unexpected credit problems or income changes could affect loan approval. The standard timeframe is 17 days, but it can vary based on the loan amount.

Moving to Pending: Once inspections are completed, and the loan is approved, contingencies are removed, and your listing status changes to "pending." At this point, you're no longer accepting backup offers. The deal is on its way to closure, barring any unexpected issues.

Final Steps:

  • Appraisal and Loan Approval: The final steps involve completing the appraisal and securing the loan. These are critical for a successful closing.

  • Seller Walkthrough: Before closing, there's usually a final walkthrough to ensure the property's condition hasn't changed since the last inspection.

  • Utilities: Keep your utilities on until the escrow period closes. If you're doing a rent-back, you'll typically shift utility responsibility to the buyer after closing.

Backup Offers: Even when you've accepted an offer, it's essential to continue seeking backup offers. This strategy helps in negotiations. If a buyer requests extensive repairs, you can leverage other potential buyers to maintain your position.

The home-selling process in California can vary in speed and complexity. While it can be a rollercoaster ride, staying informed and working with experienced professionals can help navigate it successfully.

If you're looking to buy, sell, or refinance, don't hesitate to reach out to UFS United Financial Services. We're here to assist you throughout the process.

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