The process of selling a house isn't a one-and-done transaction. It's a progression of steps. You'll have to deal with state laws that govern certain types of purchases that could affect the finality of the sale. But certain steps in the process of selling a house are pretty standard.
Signing a Contract
Coming to an agreement on price and terms between the seller and the buyer is the first step. The typical home spent 58 days on the market in November 2020, 13 days less than the same time last year nationwide.
The seller will either accept the offer, reject it outright, or issue a counteroffer. The procedure can involve just one counteroffer, or it might evolve into a multitude of counteroffers going back and forth between buyer and seller for a period of time.
At some point, ideally, there's a meeting of the minds. The listing status then changes from an active listing to a pending sale.
Some agents put a sign up in the yard that says "pending" or "in escrow" or "under contract," but a house isn't yet sold just because the seller has accepted an offer.
Time for Inspections
It's critical for buyers to get a home inspection prior to closing. Other types of inspections might be advisable as well, depending on the age, condition, and location of the property.
A buyer might further negotiate with the seller if an inspection turns up an unexpected defect. This is particularly the case if the defect is one that will cost a great deal to repair.
The buyer might threaten to cancel the transaction when an inspection turns up a serious problem unless the seller agrees to a request for repairs.
Then, of course, the repairs take time, and the house isn't sold yet when they're accomplished. It's not even considered sold when and if the buyer is satisfied with the results of the inspections.
The Buyer's Loan Is Approved
The buyer's mortgage file goes to underwriting after all the buyer's supporting documents have been received by the lender, and after an appraisal has been completed. This underwriting process can take anywhere from a few days to a few weeks.
The appraisal must support the agreed-upon purchase price. More negotiations will take place or a new appraisal might be ordered if the appraiser submits a low appraisal.
The home still isn't considered sold yet after the loan is approved.
Expect an average of about 50 days—almost two months—to pass between the time the buyer first applies for a mortgage and the closing date.
A Contingency Sale
A buyer might have to close escrow on an existing home before moving forward with the purchase of the new home. This is known as a contingency sale and the contingency must usually be satisfied or released in order to move forward with the contract.
One way to satisfy a contingency is to sign a release of contingencies or perform some other act, such as depositing all funds to close escrow. But even if the buyer deposits the entire purchase price in cash, the home might not be completely sold yet, especially if the buyer can only be held liable for liquidated damages in the event of default.
When Is a House Considered Sold?
A home isn't technically sold until the seller no longer legally owns it. It's sold when the deed has changed hands or is recorded, and when the funds have been disbursed.