Signing a Real Estate Contract: What Happens Next in the Purchase Process

28 January 2026

So, you've finally found your dream home, made an offer, and the seller accepted it—congrats! But hold up, don’t pop the champagne just yet. Signing a real estate contract is a HUGE step, but it's far from the finish line.

Now comes the tricky part: navigating the post-contract phase of the home-buying process. What happens next? What should you expect? And how can you make sure everything goes smoothly? Let’s break it all down.

Understanding the Real Estate Contract

Before we jump into what comes after signing, let's quickly go over what you just signed. A real estate contract is a legally binding agreement between a buyer and a seller outlining the terms of the sale. Here are the key components:

- Purchase price – The agreed-upon price of the home.
- Earnest money – A deposit showing you're serious about buying.
- Contingencies – Conditions that must be met before closing (like inspections and financing).
- Closing date – The day when ownership officially changes hands.

If everything in the contract is crystal clear, you’re on the right track. But now the real work begins.

Step 1: Earnest Money Deposit (EMD) – Putting Skin in the Game

Shortly after signing the contract, you’ll need to put down an earnest money deposit. Think of this as a good-faith gesture—it shows the seller that you’re committed. Typically, EMD is around 1%–3% of the home's purchase price, but it can vary.

This money goes into an escrow account, which is a neutral third-party account that holds funds until closing. Don’t worry, this deposit isn’t extra money— it gets applied to your down payment or closing costs later.

Just remember, if you back out of the deal without a valid reason (like failing a contingency), you could lose that deposit. So proceed wisely!

Step 2: Home Inspection – Uncovering Potential Pitfalls

Even if the house looks perfect, don’t skip the home inspection. This step helps you avoid any nasty surprises down the road.

A licensed inspector will examine the property’s:

✔️ Foundation and structure
✔️ Roof and gutters
✔️ Plumbing and electrical systems
✔️ HVAC system (heating & cooling)
✔️ Appliances and more

If the inspector finds serious problems—like a cracked foundation or a leaky roof—you have a few options:

1. Negotiate repairs – Ask the seller to fix the issues before closing.
2. Request a price reduction – Take on the repairs yourself but lower the purchase price.
3. Walk away – If the problems are too severe and the seller won’t budge, you can back out (as long as you have an inspection contingency).

The inspection is your chance to avoid buying a money pit, so take this step seriously.

Step 3: Appraisal – Making Sure the Home Is Worth It

If you're financing the purchase with a mortgage, your lender will require a professional appraisal. Why? Because they want to ensure the home’s value matches the loan amount.

If the appraisal comes back at or above the purchase price, great! But if it comes back lower, you could run into trouble. Here’s what you can do:

- Negotiate with the seller to lower the price.
- Pay the difference out of pocket (not ideal, but an option).
- Dispute the appraisal if you believe there was an error.
- Walk away if there's an appraisal contingency.

An appraisal gap can throw a wrench in your plans, so be prepared.

Step 4: Mortgage Approval – Getting the Green Light

Even if you're pre-approved, your lender still needs to finalize your mortgage before you can close. This is called the underwriting process, where they take a deep dive into your finances.

The lender will verify:

✔️ Your income and employment
✔️ Your credit score and debt-to-income ratio
✔️ The property details and appraisal reports

💡 Pro tip: Avoid making big financial moves during this time—don’t buy a new car, open a credit card, or quit your job. Even small changes could mess up your mortgage approval.

If all goes well, you’ll get the much-awaited final loan approval (also known as clear-to-close).

Step 5: Title Search & Title Insurance – Avoiding Legal Headaches

Before closing, a title company will conduct a title search to verify that the home's title is free from legal issues.

They'll check for:

- Unpaid taxes
- Liens from past owners
- Disputes over ownership

If any red flags pop up, they need to be resolved before you can move forward.

You'll also be required to buy title insurance, which protects you from any legal claims against the property down the road. It’s a one-time payment, but it’s worth every penny.

Step 6: Homeowners Insurance – Protecting Your Investment

Lenders won’t finalize your mortgage unless you have homeowners insurance in place.

This helps cover the cost of damage from fires, storms, theft, and other disasters. Different policies cover different risks, so shop around for the best deal.

You may also need extra coverage if you’re buying in a flood-prone or earthquake-prone area.

Step 7: Final Walkthrough – One Last Check Before Closing

A day or two before closing, you’ll do a final walkthrough of the property with your real estate agent.

This is your last opportunity to make sure:

✅ The agreed-upon repairs (if any) were completed
✅ Everything is in working condition
✅ The home looks as expected (no damage from the sellers moving out)

If anything is off, speak up ASAP! It’s easier to negotiate now than after closing.

Step 8: Closing Day – Making It Official

This is THE big day—the moment your dream home becomes yours!

Closing typically takes place at a title company, lawyer’s office, or even remotely. Here’s what happens:

- You sign a mountain of documents (including your mortgage agreement and transfer of ownership papers).
- You pay your closing costs (which usually range from 2% to 5% of the home price).
- The lender releases the funds, and the seller gets paid.
- You get the keys! 🎉

Once all documents are signed and the funds are disbursed, you're officially a homeowner. Time to celebrate!

Final Thoughts

Signing a real estate contract is just the beginning of the home-buying journey. From inspections and appraisals to mortgage approvals and closing day, each step plays a crucial role in the process.

While it may seem overwhelming, staying informed and working with a reliable real estate agent can help you navigate each milestone confidently. So take a deep breath—you’re closer than ever to owning your dream home!