The real estate closing process is the final and most important step to selling your home. Finding a buyer who can make the right offer may seem like most of the work is already done, but from a legal and financial standpoint the transaction is far from complete.
Here are the steps you and the buyer must take to finalize the home sale and make it official:
1. Draft a Sales Contract
As the seller, you hold a lot of power for setting the tempo and terms of a sale. You will typically be the party to create the “contract of sale” that dictates a timeframe for the sale to take place, the agreed upon terms of the sale and how any sort of problems or disputes will be resolved.
A real estate agent or specialized attorney can help you create the contract based on best legal practices. Make sure you review the document carefully to avoid any loopholes or ambiguities that the buyer could potentially take advantage of.
2. Find a Title Company to Work With
A title company will do most of the leg work for you and the buyer. They will perform a title search to confirm the ownership status of the property, handle fund transfers between you and lenders, calculate costs such as due property taxes and generally facilitate the entire real estate closing process procedures.
Because of these important roles, finding a reliable and trustworthy title company is crucial. Both you and the buyer should have a say in locating a title company that can meet your needs for an affordable cost and without any unneeded setbacks.
Once a title company is decided upon, you will submit the contract of sale to them to let them know the details of the transaction. They will begin a title search of your property to ensure the legitimacy of your ownership and your ability to transfer it to another party.
3. Maintain the House and Accommodate Buyer Inspections
Your buyer will likely have placed contingency offers on their purchase price that hinge on a clean inspection, an adequate appraisal and other factors. These contingencies give them the power to renegotiate the sales price, make other demands or walk away from a transaction based on the findings of these official third-party reviews.
Accommodate these demands but remember that the buyer’s ability to walk away means that you are under no obligation to accept new terms. Be patient with their need to have your home inspected. They may request that repairs be performed or that the home price lowered if the inspector discovers anything wrong with the home. You can agree to these terms, or you can counter their offer with another reasonable set of terms.
You will be expected to abide by the final terms as a condition of the sale. Make any repairs or revise the sales contract as needed. The buyer’s mortgage appraisal will only present problems if they severely undervalue the home, which will put you in a position to either lower the closing price to the appraised value or find a middle ground where the buyer can still pay for the home without 100 percent financing.
4. Removing Contingencies
Accommodating the buyer’s contingencies will likely be the most stressful step for the seller. Once the buyer is satisfied, the seller’s agent or attorney can then remove contingencies from the seller’s offer and set the terms of the sales contract in motion.
At this point, the title search should be completed and the buyer will be able to review the terms of ownership based on the title company’s findings. If the buyer purchases title insurance, they should be protected from most title issues and have no grounds to object to the title assessment.
5. Finalize the Property Transfer
After the buyer reviews the title assessment, the true closing process can begin. Both the buyer and seller will meet alongside their respective agents, a notary, the title company agent and potentially an attorney to perform the final act of signing the transfer documents. Each party will likely have a stack of paperwork to sign, including the buyer’s loan agreement.
The buyer or the buyer’s lender will place funds in a third-party account such as an escrow or title company transfer account. Either within a few days or at that exact moment the seller will receive final payment.
The full costs of closing are dealt with at signing, so ensure that as a seller you have arranged to pay for agents’ commission, closing costs, due property taxes and any other costs you have agreed to cover as part of the transaction.
You should then present the buyer their keys along with any documentation such as appliance warranties, receipts for work done or anything else they may need. The buyer will take possession of the home immediately or at an agreed-upon date.
6. Disconnect Your Utilities and Move Out
Now that you no longer officially own the property, you will have a limited time to vacate the premises. You can take everything that you did not promise the buyer with you, including any fixtures that were not part of the final sale agreement. Determine a day that utilities can be transferred to the new owner with either no or minimal interruption in service.
Once your last bags are packed and the last stick of furniture is removed, you will have to release any keys you have to the property and say goodbye to your former home one last time. This moment will be bittersweet, though, considering the handsome profit you probably just made. A
We close over 500 homes a year! If you would like to pick our brains on this process or any during a home’s sale, call us at (972) 992-1471. Curious about how much your home is worth?–Simply fill out the form on the right!