Getting an offer accepted on a house is one of the most exciting moments in your homeownership journey, but then you may be wondering, “Now what?” When a seller accepts your offer, the property is considered conditionally sold, and the closing period begins. During this period, you will need to obtain inspections, mortgage approval, and transfer funds — and pay a significant amount of closing costs. Here are the steps you’ll need to take, from offer acceptance to receiving your keys on closing day.
Key Takeaways
- After your house offer is accepted, you enter a closing period that requires you to complete several steps before the closing date
- You must provide a deposit, typically around 5% of the purchase price, within 24 hours of your offer being accepted
- Be prepared for closing costs (2% to 4% of the purchase price) on top of the down payment. These costs include land transfer tax, legal fees, inspection fees, appraisal, and title insurance
- You’ll need to work with several professionals, including a real estate attorney, to close on a home
Understanding the Closing Period: What Happens Between Offer and Final Sale
Once your conditional offer has been accepted, you’ll enter the closing period of the homebuying process. During this period, you will need to fulfill the conditions outlined in the purchase agreement.
The closing period is the time between when your house offer is accepted by the seller and the closing date listed in the purchase agreement. Typically, the closing period is 30 to 60 days; however, it can be 90 days or longer for complex properties or when the buyer is selling their current property.
Step-by-Step Timeline After Your House Offer Is Accepted
Step 1: Submit Your Deposit (Earnest Money)
A deposit is the amount of money that you pay after they accept your offer. Typically, this “good faith” payment is to demonstrate that you are a serious buyer.
In most cases, you will need to pay the deposit within 24 hours, so you should have the funds available before you make an offer on the property. Failing to meet the deposit deadline can provide the seller with grounds to cancel the deal.
There is no formal deposit amount in Canada; it can range from as little as $500 to $2,500. However, the deposit amount usually ranges from 5% to 10% of the purchase price in Ontario. Typically, you will pay your deposit via a bank draft or certified cheque to the seller’s brokerage. The deposit is then held in a trust account and becomes part of your down payment upon closing.
Step 2: Start Your Home Inspections and Due Diligence
In the weeks following your acceptance, you’ll need to perform inspections and system tests. The most common type of inspection is a home inspection. A home inspection provides an overview of the home’s condition, allowing you to address concerns or defects with the seller before closing. A home inspection typically costs between $500 and $600.
If the home has a septic system or uses well water instead of municipal water, consider scheduling inspections of these systems. Septic systems and wells can be expensive to replace, and an inspection will reveal potentially costly problems. Expect to pay up to $500 each, depending on the extent of the assessment.
Your home inspector will provide you with a report of their findings after they complete the inspection. If the inspection reveals significant issues, you have a few options. You can negotiate with the seller to have any necessary repairs completed before closing, complete the purchase and manage the repairs yourself, or you can walk away from the sale.
Step 3: Mortgage Approval (Not Just Pre-Approval)
To get financing for your new home, you’ll need to go through the mortgage approval process. If you’ve already obtained pre-approval, your lender or mortgage broker will process your application. However, if you did not obtain pre-approval, you will need to start your application from scratch.
The first step of a mortgage application is to submit your paperwork, including:
- Proof of Income and Employment:
- Recent pay stubs and a letter of employment
- Two years of T4s
- T1 General forms for self-employed individuals
- Proof of Down Payment:
- Bank statements from the last 90 days showing the required funds
- A letter certifying the source of any gifted down payment funds
- Financial Obligations:
- A comprehensive list of all debts and financial obligations
- Property Information:
- The real estate listing and the signed sale agreement
- Estimates for housing costs
- Contact information for your lawyer
Your application will then undergo a review process called mortgage underwriting, during which the lender will determine your eligibility for a mortgage.
Additionally, your lender may request an appraisal and require you to cover the associated costs. An appraisal is a professional’s estimate of the value of your home. Your lender will use an appraisal to ensure they can sell your home if you default on your mortgage. If the appraisal amount is lower than the purchase price, you will need to make up the difference by increasing your down payment.
Step 4: Legal Review, Title Work & Required Insurance
After the lender has approved your mortgage, you’ll meet with your real estate lawyer to facilitate the home purchase. Real estate lawyers perform various functions, but their primary job is to review your sales contract and other documentation to ensure the sale is in your best interest. They will also handle the transfer of the mortgage, down payment, and other costs to the seller. You can expect to pay around $1,000 to $2,000 for a real estate lawyer.
Your real estate lawyer will make sure you pay fees like land transfer tax, which is a tax you’ll pay to your province and sometimes your municipality to transfer property ownership. LTT is calculated as a percentage of the purchase price. For example, homebuyers in Toronto will pay an LTT to both the province and the municipality, up to 4% of the home’s value. Some regions offer rebates to first-time homebuyers.
Your real estate lawyer will also assist you in purchasing title insurance, which provides protection in the event of a dispute over property ownership. If you have a mortgage, your lender will likely require title insurance. The cost ranges from $100 to $300.
Step 5: Pre-Closing Tasks (Insurance, Utilities, Move Prep)
During the closing period, several tasks will need to be accomplished. Firstly, you’ll need to obtain home insurance, as this is a requirement for most mortgage lenders. Typically, your insurance provider will provide a binder letter to confirm that your policy will activate on the closing date.
Secondly, you will need to arrange for the utilities to be transferred after the closing date. This includes electricity, water, gas, and internet services. Contact utility companies as soon as you confirm your closing date to prevent any service disruptions.
Lastly, remember to update your mailing address and set up mail forwarding to avoid missing important mail.
Step 6: Final Walkthrough Before Closing
It’s essential that you conduct a final walkthrough before closing, as this allows you to confirm that the home is in the same condition (or better) than when you last viewed it. Typically, you’ll do this walkthrough with your real estate agent 24 to 48 hours before closing.
If the seller leaves work unfinished or allows the home’s condition to deteriorate, you have the right to either postpone the closing date or hold back a portion of the funds. Your real estate lawyer will handle communication with the seller’s lawyer to negotiate a resolution and ensure the sale can still proceed.
Step 7: Sign Paperwork & Transfer Funds
If you’re satisfied with your walkthrough, you’ll meet with your real estate lawyer to sign documents, and they’ll transfer the funds to the seller. Your lawyer typically performs this transfer on closing day as part of the overall fees you’ve already paid them.
Step 8: Take Possession & Pick Up the Keys
Closing day is the day you’ve been waiting for since your house offer was accepted, as you’ll get the keys to your new home! Closing occurs after your lawyer transfers funds to the seller and the seller has removed all their possessions from your home. Please note that you may not receive the keys until later in the day, so it’s smart to plan to move in a day or two after closing.
Special Considerations for Condo Buyers
If you are purchasing a condo, your real estate lawyer will review the status certificate, a document that outlines crucial information about the financial and legal health of the condo building and its corporation. Your real estate lawyer will also provide it to your lender. The cost for a status certificate is usually around $100.
Additionally, your real estate lawyer will coordinate payment to the seller for any utilities and property taxes they have prepaid. For example, if the seller has paid for their utilities beyond the possession date, you’ll need to reimburse them for the portion that you will consume. The amount you owe will depend on various factors; however, your real estate lawyer will provide you with a complete cost breakdown. Similar to prepaid utilities, the seller may have prepaid property taxes, and you’ll need to reimburse them for the portion after the closing date.
Closing Costs: Full Breakdown of What You’ll Pay Before Getting the Keys
When you think of saving for a home, many people plan for the down payment and overlook closing costs. However, closing costs can range between 2% and 4% of the purchase price, which can be a significant sum. Prepare using our closing costs breakdown, which includes common fees and their typical amounts:
What Can Delay or Complicate Your Closing?
Unfortunately, things can go wrong during the closing process. Here are some common pitfalls and how to avoid them, if possible:
- Low appraisal – If the home appraisal comes back lower than the purchase price, you may need to make up for the difference with a larger down payment. If the appraisal is significantly less than the purchase price, you may need to renegotiate the price with the seller
- Financing delays – Begin the mortgage approval process as soon as possible after your offer is accepted. Getting pre-approved before you make an offer can help speed up the process
- Missing documents – Your mortgage lender and lawyer will require numerous documents. Be sure to have everything together to submit
- Title issues – Unpaid property taxes, boundary disputes, and public record errors can lead to title transfer complications. Your real estate lawyer can help resolve these issues
- Big life changes – Changing jobs, taking on new debt, or lowering your credit score can affect your ability to get final mortgage approval and close on the house purchase
Tips to Stay Organized During the Closing Process
The closing process involves many steps, and it’s essential that you stay organized so that your home purchase will close on time. Here are some tips to keep in mind as you prepare for closing:
- Keep a folder of all documents – You will have to submit many documents to your lawyer and mortgage provider. Keep a folder (either digitally or physically) of all documents for easy access
- Centralize communication – Questions and requests can get lost in the shuffle if your lawyer and real estate agent are contacting you through multiple channels, such as text, email, and phone calls. Try to centralize all communications into one place
Bottom Line
The process of buying your dream home can feel like a marathon, and the closing period is the final sprint to the finish line. While it’s a busy time in your life, with plenty of paperwork, meeting coordination, and cost, in the end, you’ll have a new place to call home.
It’s important to have a qualified real estate professional on your side during the entire process. Find your next home on Zolo and connect with a Zolo real estate agent.
House Offer Accepted FAQs
What are closing costs?
Closing costs are the legal and administrative fees associated with buying or selling a home. These costs are not included in your down payment and must be paid up front on the closing date.
What happens immediately after an offer is accepted?
Immediately after your offer to buy a home is accepted by the seller, you will need to submit your deposit and begin fulfilling the conditions outlined in the purchase agreement.
How long does it take to close on a house after offer acceptance?
The most common closing period length in Canada is 30 to 60 days. However, shorter closing periods are possible for cash deals, and a longer period of 90 days or more may be necessary if one of the parties is buying or selling another home simultaneously.
Can a house deal fall through after an offer is accepted?
Yes, an agreement to buy a home can fall through after the offer has been accepted if either the buyer or the seller fails to meet the conditions laid out in the purchase agreement. For instance, if the buyer does not get mortgage approval, or the home inspection reveals major issues.
Do you pay a deposit before or after an offer is accepted?
Generally, you will need to pay your deposit, often referred to as the earnest money or good faith deposit, within 24 hours of receiving confirmation that the seller has formally accepted your Offer to Purchase the property.
What are the biggest closing costs buyers should expect?
The bulk of closing costs for buyers in Canada are the land transfer tax and legal fees. However, several smaller fees, such as the home appraisal, property survey, home inspection, and title insurance, can add up quickly.
Can you withdraw an accepted offer on a house?
Yes, a buyer can withdraw an accepted offer to purchase a home without penalty in a few circumstances. For example, if the buyer or seller fails to meet any conditions listed in the contract, the deal becomes void, and the transaction is cancelled.
What is included in a final walkthrough?
You’ll complete a final walkthrough of the property before the real estate transaction closes. The purpose of a final walkthrough is to ensure that the home is in the same condition (or better) than it was when you first viewed it. You should also ensure that any items negotiated are still in the home, like appliances or window treatments.
