By Priscilla Toomey, Licensed Associate Real Estate Broker, Julia B. Fee/Sotheby's International Realty

Apr. 8, 2020: As the proverb says, "there's many a slip twixt the cup and the lip," and it holds true in real estate just as in many other areas of everyday life.

Once you find a home and agree on price and terms, there are many steps to be taken before the deal closes. They fall under the heading "transaction management."

The lawyers for the parties have their own steps to manage.

This article focuses on seven vital steps of which the parties and their real estate agents need to be aware.

-Agents for both buyers and sellers write up a "Purchase Memo" spelling out the price and terms of the transaction. Terms would include a proposed closing date and any contingencies such as a mortgage commitment and what percentage cash versus mortgage will be coming from the buyers.

The Memo identifies the parties with their correct legal names, any inclusions and exclusions, and any special terms. The sellers' lawyer uses the Purchase Memo as the basis for drafting the Contract.

– Inspections are done before contracts are signed, and if any issue arises, it is negotiated then. At this point, the agent for the buyer is also responsible for verifying taxes and for making sure all necessary Certificates of Occupancy are in place.

– Until contracts are signed by both parties, and the buyers have paid the earnest money deposit (typically 10% in this area), either party is free to back out without penalty. If, for example, a better offer comes in to the sellers, they are free to either negotiate with the original buyers or take the new offer.

– Staying in communication is vital — each party with their agent and the agents with such other. Circumstances may change, contingencies have expiration dates, and sellers may decide to ask the buyers about whether they want some items of furniture, either to buy or to be left for them.

-While all-cash transactions do occur, it is more common for there to be a mortgage and an appraisal. Typically, the lender will lend up to 80% of the appraised value, so it is important that the appraisal come in at the contract price or very close to it (or over it, of course).

The agent for the buyer should be in touch with the lender to make sure that the appraiser is familiar with the area where the home is located. Neither the agent nor the lender can choose the appraiser, but this is a reasonable question to ask.

Then the buyers' agent should prepare a package of comparable recent sales to give to the appraiser when they meet at the property. The appraiser doesn't have to accept this information, but most do.

– The Purchase Memo will typically state the projected closing date as an "on or about" date. In practice, that gives either party up to 30 days to adjust the actual closing date without penalty. If it is adjusted more than a few days, there may be a need for either or both parties to make alternate living arrangements in the interim.

– Once the mortgage lender issues a mortgage commitment, the lawyers for the sellers and buyers arrange a date for the closing in conjunction with the lender. In anticipation of the closing, the lawyers for the parties advise their clients what to bring to the closing and what to expect from the closing.

Within 48 hours or less before the scheduled closing, the buyer and their agent will perform a "walk-through." The purpose of the "walk-through" is (1) to make sure the condition of the property has not changed since the inspection and (2) to make sure that any items which the parties agreed would be repaired have been.

If this is not the case, there will be another negotiation to make sure the property which is purchased is what was agreed upon. A "hold back" of money may be needed if the required repairs cannot be completed in time for the closing.

The culmination of these steps is the closing at which Title will pass from the sellers to the buyers. The sellers leave happily with the proceeds, and the buyers can settle happily into their new home.

Photo courtesy Julia B. Fee/Sotheby's International Realty

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