It has been a long and grueling process. You have done all of the legwork, from finding a buyer’s agent, receiving your pre-approval, looking at dozens of properties, negotiating back and forth, and having your offer finally accepted. There may have even been a competing bidder. You think it is time to relax, but it is too early to let your guard down.
Until you have a signed contract with the seller’s attorney, your team still has a lot of work to do, and time is of the essence.
After a price has been agreed upon, each day is crucial. Your broker is now waiting on a deal sheet, which is one or two pages outlying all the parties involved and the terms of the deal. The deal sheet enables the seller’s attorney to draft a contract and rider that will be sent to your attorney. This includes the price, concessions, and any contingencies put in place. A deal sheet should be drafted by the seller’s agent and delivered to your attorney within 24 or 48 hours after an accepted offer has been reached.
The next steps
Upon receiving the contract, most transactions are expected to be signed, and a contract deposit of 10% exchanged within five to seven business days. During this time, your attorney should spring into action and conduct his or her due diligence. You should be prepared with your financing, and have the funds available for a wire transfer at your attorney’s request.
When conducting due diligence, your attorney will review the contract, rider, offering plan, board minutes, financials, and inquire about any questions he or she may have with the seller’s attorney or the building management.
Don’t get too comfortable
Everything may seem to be moving along well. However, there is a still a chance you could lose the deal while in attorney review. Some sellers are honorable and have a conscience, while others are hardcore businesspeople that are only concerned with money. The latter can make the process more difficult.
Depending on your price point and the state of the market at the time, you may have to fend off competitors until the ink is dry and a copy of a countersigned contract is in your hands.
Communication is crucial during the five to seven days of due diligence. Your team should be on the phone and behind the computer working for you to get things done. If another buyer is aggressive and comes along before the contract is signed, you might receive a disappointing call saying there is a higher offer and the deal is on hold. Although unfortunate, at least you are abreast of the situation and can decide, with your broker, the next course of action.
The right thing for the seller and his/her agent to extend the opportunity for you to match or beat the offer. You should be forewarned that not all sellers and their agents proceed in this manner, however. What would stop a seller from coming back to you yet again, after another buyer reappears? The best protection for you is to get a written agreement from the seller’s broker or attorney. Although verbal agreements are binding in New York, a written confirmation is the way to go.
This unpleasant scenario sounds harsh, given all you have been through to get to this point. But, it does happen, especially if the property strikes an accord with an emotional buyer.
Review is complete
Once your attorney has completed the due diligence, and he or she believes the terms of the contract and rider are fair and proper, he/she will advise you to sign and proceed with the deal. He or she should have found the building to be in good financial health. This includes a review of potential liabilities and assessments. A good attorney will have answered any questions you may have had throughout the entire process.
After signing the contract, transferring the deposit and receiving a counter-signed contract from the seller, you are safe from other bidders. You are now officially “in contract,” and have earned a good night’s sleep. The next step is to proceed with the condo or co-op application, which your agent can help you to complete.
Remember, having an experienced team, including a broker and local New York real estate attorney, is crucial to finding you a home. A seasoned buyers agent will help you manage a process that can get hairy.