Real Estate Closing: A 6-Step Guide
The real estate closing process refers to that last but all-important step in sealing the deal between the buyer and the seller. In the real estate industry, this can also be called the settlement, given how it’s also during this process that all obligations between the buyer and the seller are settled.
With that, it is a must for this real estate closing process to be done and completed perfectly. You don’t want to rush this as it may make or break your sale’s success. Without the completion of this process, unfortunately, the transfer of the home's ownership may be filled with inadequacies. And worse, it may not be legally complied with.
Whether you are a real estate agent, a seller, or a buyer, it is a good move to learn more about the real estate closing process. Your knowledge will come in handy in ensuring each step is successfully taken with not a single bit being missed out on.
1. Hire A Closing Attorney
Even with a real estate agent helping you, it’s still prudent to have a closing attorney. You never know what legal problems may arise during the process or because of the sale.
In addition, it is also essential to note that there may be some legal documents relating to the closing process that must be accomplished and reviewed. This can be complicated, especially for first-time buyers. You can give yourself all the assurance you need with a lawyer by your side. You may click here to help you start your hunt for potential real estate lawyers to hire.
2. Complete The Closing Disclosure
A closing disclosure is a document sent by the lender at least three days before the closing date. It is the buyer’s responsibility to go through the fine print of the closing disclosure, as it lays out all the essential information about the loan in detail.
Some vital information includes the loan disclosures, loan terms like the loan amount and corresponding interest rate, and the amount of money the seller needs to bring during real estate closing.
3. Title Examination And Search
This process of searching and examining the title includes going through public records. In general, it should provide not just the title itself but also any pertinent attachments that can potentially affect the smooth sale of the property. It may include deeds, paving assessments, mortgages, wills, liens, and divorce settlement, if applicable.
It is a crucial step to verify that the title is indeed clean and free from any encumbrances that can affect the sale. After all, no buyer wants to buy a ‘dirty’ and problematic property.
4. Go Through The Seller’s Disclosure
Another important legal document that needs to be completed in the real estate closing process is the seller’s disclosure. As the name suggests, it’s a disclosure document prepared by the seller to lay down all of the known defects of the property. It is for transparency, as any defect a buyer is aware of may also affect their confidence in pushing through with the sale.
If the buyer finds any red flags during this disclosure, the buyer may request more details from the seller regarding any of those defects.
5. Enter Into Escrow
The Escrow process aims to protect the financial interests of both the buyer and the seller. In general, it is a neutral third party responsible for holding all the funding and the documents involved in real estate transactions.
Escrow can take some time to resolve. It usually requires 30 to 60 days for property transactions to be completed.
6. Acceptance Of The Sales And Purchase Agreement
There is no perfect sale to speak of without a contract that binds both the buyer and the seller. The sales and purchase agreement is a legal document both parties sign to finalize the transaction. This agreement is an all-important record containing all the critical information regarding the offer, including the agreed terms, conditions, and closing date.
In some cases, the signed contract is sent to the seller’s agent and is usually accompanied by the check for the down or full payment of the property. It’s also during this step that the real estate agent can help you process and complete other essential documents like all other pertinent legal papers, tax information, and inspection reports, to name a few.
Wrapping Up
Buying a home is always an exciting process. After searching for the right one and negotiating the price, you’re ready to seal the deal. This process is what’s usually referred to as real estate closing. The steps discussed in this article aim to guide and walk you through the procedure.
Nevertheless, it is always best to consult professionals and allow them to assist you during this process. Such experts include reputable real estate agents and real estate lawyers.
