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Home Selling: When to start packing?
Dear Phyllis,
After two months on the market, we finally accepted an offer and started escrow. Having lived in our home for more than 10 years, we have a lot of stuff and were hoping to finish packing. But our agent advised us that it is too soon, as there are contingencies. The buyers have an inspection and loan contingency. Can you explain contingencies and how it relates to the buyer’s deposit. At what point can we keep their money if they don’t complete the deal. Anxious to get going
Dear Anxious,
Unfortunately, the home-selling process often involves multiple rounds of negotiation. First, you negotiate the sale price, closing date, and possession terms. Then, during the inspection period, buyers often request repairs or credits. However, in a strong seller’s market, sellers usually face limited renegotiation unless inspectors uncover major or costly defects.
In addition, the appraisal can trigger another round of negotiations. The lender bases the loan-to-value (LTV) on the lower of the sale price or the appraised value. For example, if a buyer puts 20% down on a $1,000,000 purchase, the bank lends $800,000. However, if the appraisal comes in at $975,000, the lender now bases the loan on that value and lends $780,000. As a result, the buyer must either bring an additional $20,000 to closing or renegotiate the price. If the buyer lacks the funds and has an appraisal contingency, they may cancel escrow and receive their earnest money deposit back.
Finally, packing often raises the biggest question. Once the buyer removes the inspection contingency, you gain more certainty. At that point, have your Realtor® confirm loan and appraisal status with the buyer’s lender. Then follow your agent’s guidance on when to
Not until your buyer removes all contingencies in writing is their deposit at risk. Depending on what you and the buyer outlined in the purchase contract determines the intricacies of keeping the buyer’s deposit. But this too is likely a further negotiation. Although the money is with escrow, escrow cannot release the deposit to either party without each party’s written authorization.
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