Closing is the phase in the home selling process when money and documents are transferred in order to transfer ownership of the property to the buyer.
The closing date is the date ownership of the property is officially transferred from the seller to the buyer; it’s an exciting moment. The home closing process is all of the steps that are outlined in the sale contract that must happen from the time you accept the buyer’s offer to the closing date.
You’ve finished negotiations and accepted an offer from a buyer. Congratulations! Now, there are a few things to take care of:
Do a title search and obtain title insurance
Your closing agent will order a title search, which is a review of public records to make sure you’re the legal owner of your property. If there are any claims or judgments against the property, the title search should uncover them. These issues must be resolved for the sale to move forward.
Unlike homeowners insurance which helps protect against future events like a fire, title insurance helps protect against past events affecting your home. For example, if you later found out the home you purchased has a lien for unpaid bills, title insurance would typically have you covered.
There are generally two types of title insurance in a home sale: a policy for the new owner and a policy for the lender. The party responsible for paying each policy varies by state and even county. In some cases, buyers and sellers can haggle over who pays each cost.
Complete the home inspection
A home inspection Home Inspection isn’t required, but many buyers insist on it to ensure there are no hidden problems with the property. The inspection will take place shortly after you accept the buyer’s offer.
If your home is in need of any repairs, let your agent know if you haven’t already done so. They may recommend that you make these repairs before the home inspection to avoid any potential issues.
An inspection will typically examine the safety, functionality, and quality of the home’s features. Here are some of the most common items our home assessment team looks for.
Depending on the contingencies outlined in the sale contract, the buyer can ask you to remedy any major repairs before closing or ask for a price reduction to cover the costs of making the repairs. You can choose to skip the work and have the buyer handle any repairs after you move out. You can credit the buyer to cover the costs, which are often lower than engaging repair vendors yourself.
Don’t forget lender appraisal
If the buyer is borrowing money for the purchase, the mortgage lender will arrange for a professional appraisal. This is done so the lender can be confident that the amount of money it’s lending to the buyer is in line with the market value of the home in case the lender needs to repossess the house. The appraisal is based on the estimated value of the home’s individual features, as well as comparable homes that have sold recently nearby.
If your home appraises below the sale price, lenders are unlikely to approve a loan to the buyer for that amount. If this happens, you will either have to ask the buyer to make up the difference, lower the sale price, or challenge the appraisal.
The final walk-through typically occurs 24-48 hours before closing. The buyer and their agent will walk through the property one last time to make sure everything is in order.
They will check that all required repairs have been made, that the property is clean and damage-free, and that all of your possessions have been removed unless you’ve arranged for certain items to stay. If the buyer discovers anything problematic, you’ll need to address it or the closing might be delayed.
Finalizing the sale on the closing date
The closing date is when the sale transaction is officially completed. You will sign a lot of paperwork, including signing the deed to the property over to the buyer. Don’t be afraid to ask your attorney or escrow agent about any documents you don’t understand. You have the right to know what you’re signing.
The closing will take place at the office of your escrow agent, title agent, or attorney. Depending on your state, you might not be required to attend the closing. Ask your real estate agent or attorney if your attendance is mandatory, or if you may sign the paperwork ahead of time. If so, your agent or attorney will provide it at the closing.
Once all paperwork has been signed and funds have been disbursed, the buyer is officially the new owner of the property.
You don’t need to bring much to the closing: usually just a government-issued photo ID, the keys to the property, and any outstanding documents and paperwork your attorney or escrow agent instructs you to bring. These may include documents showing you’ve completed all repairs requested by the buyer.
The full closing process, from the initial offer acceptance to the closing date, takes an average of 50 days, according to Realtor.com.
In a traditional sale, the buyer’s lender will be originating and underwriting the loan. This is a time-consuming process the lender undertakes to determine if the buyer qualifies for the loan. The underwriting process is one of the major things that can delay a closing.
The National Association of Realtors reports that nearly one-third of all closings are delayed, so be prepared for that possibility. Common issues that delay closing beyond buyer financing issues include title issues, home inspection issues, and home appraisal issues.
Both parties have obligations to fulfill under the sales contract. During the closing process, you’ll typically be required to:
These items aren’t typically required but they’re either a good idea to consider or a nice gesture for the new owner:
Some states and municipalities have additional requirements, so check with your real estate agent or attorney. For example, your state may require a septic system inspection, or a smoke and carbon monoxide detector certificate.
During the closing process, buyers are typically required to:
As a Certified Probate & Trust Specialist you can rest assured that as a Real estate professional, I have the understanding of the Probate transaction and can represent sellers or buyers in probate transactions, as well as investors looking to purchase probate properties.