You Sold Your Home! Now What Happens?

Congratulations! You just sold your home quickly and for thousands of dollars over the asking price. You may be eyeing that sale price with wide eyes, amazed that a large amount of money will soon be in your bank account.

Ultimately, the money will reach your account, but maybe not as quickly as you expected. The process of getting the Buyer's money to you involves several steps that are put in place to protect both parties.

Let's walk through the process from Offer to Closing.

The Earnest Money Deposit

As part of the Purchase Offer, The Buyer usually makes a payment—known as an Earnest Money Deposit—of between 1% and 5% of the purchase price of the home within three days of signing their offer on the home. The Buyer makes this deposit to show the Seller they are committed to buying the property, and to prove they can back up their offer with money.

But that money won’t get deposited into your vacation fund just yet. Rather, it’s held by a third party—such as an escrow company, a real estate firm, or a lawyer until the contract is finalized and the sale is closed. That way, if anything goes wrong from the contract to the inspection, the neutral party can fairly distribute the Earnest Money Deposit—usually back to the Buyer.

 If, however, the Buyer cancels the sale for no legitimate reason, or misses key dates in the contract, the Seller may have the right to keep the money.

What's The Difference Between the Earnest Money Deposit and The Down Payment?

The Buyer makes the Earnest Money Deposit when they sign the purchase contract and makes the Down Payment at Closing. As discussed prior, the Earnest Money Deposit proves to the Seller that the Buyer is both qualified to buy the home and serious about their offer.

On the other hand, the point of the Down Payment is for Buyer to prove to the lending institution that they have enough money to pay back the loan they’re applying for.  Their downpayment is combined with other fees into what's known as Cash to Close and is paid by the Buyer to the Seller’s Closing attorney in the form of a bank check at the Closing table.

What Else Happens Prior To Closing?

While the Buyer's lender is processing their loan for approval, both Buyer and Sellers have various obligations described in their purchase and sale agreement. These may include inspections, repairs, disclosures, and various contingencies. The specific timelines and deadlines will depend on the purchase contract. At the same time, a title insurance company investigates whether the property meets the needs and requirements of the Buyer and their lender.

The entire process to get to the Closing table can take anywhere from 30 days to three months, but the average time is 50 days. Closing occurs when all these steps have been completed and the Buyer's loan is approved.

 How Do the Sellers Get Paid?

Hurrah, it’s Closing day. This is when you will hand over the keys to your former castle and the Buyer will hand over the money to buy it.

At Closing, the Buyer makes the Down Payment - minus the Earnest Money Deposit. This is also when other Closing costs are paid (taxes, fees). Once all the payments are made and all the necessary documents have been signed, Closing is completed, and the title is transferred from the Seller to the Buyer.

Within 48 hours of the Buyer signing the Closing documents and paying their portion of the fees, the Seller is paid the full purchase price in the form of a cashier’s check or wire transfer—minus any fees, taxes, or real estate commissions that the Seller is required to pay.