We hear it all the time, I’ve closed the deal, but what does that actually mean? Really there is more than meets the eye when it comes to closing a deal and by that we meaning finalizing the sale of a home.
Closing a real estate deal is more than just a few signatures on a piece of paper, a long list of things need to happen. Here are some steps that occur during the process. From the moment the offer is accepted to the moment of handing over the keys to the buyer, we’ve compiled the 12 steps to closing a real estate deal.
The process begins when the home goes into escrow, an account held by the third party on behalf of two parties in a deal and there are other things that happens in a home sale to complete the whole process of the sale. Also to prevent been ripped off by the seller or buyer, a unbiased third party is involved in the process which they hold the money and the documents related to the transaction until the process is completed.
Secondly, implementing a title search and insurance to be in the safe side and legal safeguard of the property so that no one else can try to claim it later for example a spurned relative who has left out of a will or tax collector who has not been paid. A title officer will perform a title search to make sure there no clouds on the title and if he come across any problems on the title of the property could be resolved before settling the transaction.
Third step of closing would be to find an attorney which is an optional step to get professional legal opinion in closing documents. It is better to get a good understanding of the process with a help of experience real estate attorney closing the deal. A real estate attorney can look into potential problems in the paper work thoroughly and help to resolve any issues related to the documents.
Fourth is negotiating closing costs where Escrow Company charge for their services and try to take advantage of the consumers ignorance by adding junk fee and increase the cost of the service. Fees to lookout for is administrative fees, application review fees, appraisal review fees, ancillary fees, email fees, processing fees and settlement fees. Junk fee could be excluded or bargain by speaking up with escrow company and standing against it with the escrow company.
Fifth step is to complete the home inspection which is not required but it is best to get it done so that you would not regret later for not doing it on time. During an inspection if serious problems are exposed with the property the deal could be turn down. It can be fixed by the seller or get the money to get it fixed .It is best to include a property inspection with the purchase offer.
Sixth, complete the pest inspection which is different to home inspection and involve a specialist to make sure the house is not destroyed by insects for example by termites and carpenter ants. Through the inspections it would be easy find problems related to termites. It could be spread throughout the house and it is expensive to get it fixed. If there is a problem it could be eliminated which it would depend on the cost to get it fixed. In fact if a pest related problem is found the mortgage companies will require to get it fixed before closing the deal.
Seventh step to negotiate the offer if any problems exposes with the checks and could be renegotiating the purchase price to reflect cost of the repair cost. If the price is not reduce could get the seller to pay for the repairs event the contract states that does not much resources to ask for repairs or a reduction in price but still could bargain or back out from the deal if a major problem is found that seller won’t fix it or pay for the repair.
Eight is to lock the interest rates if the lender is good at looking into interest rates closely to lock it at the low point.Interst rates are unpredictable and alters several times a day it is not easy to track it down. When the rates are reasonable with the current market condition and within your means and depend on credit score. Also the rates depend on geographic region and the type of loan and may not be able to get best rates as advertised.
Ninth step is to remove contingencies if real estate agent helped to draw a good purchase offer it could likely be due several reasons such as that the interest rate not exceed a certain percent that can afford, home inspection not revealing any major problems with the home, seller fully disclosing any known problems with the home or pest inspection not revealing any major infestations or damage to the home and seller completing any agreed upon repair. These contingencies eventually must remove in writing by certain dates. It is known as active approval which should be stated in the purchase offer for a deal to close and in purchase agreements contingencies be inactively approved.
Tenth, funding escrow to deposit earnest money of signing the purchase agreement to show the seller that buyer is serious about the intention of purchasing the house. If the buyer back out the earnest money goes to the seller as reimbursement and if the seller back out money goes to the buyer. To complete the purchase additional funds have to be deposit to the escrow. Earnest money deposit is generally applied toward the down payment. To complete the closing of the purchase by paying the rest of the down payment and closing cost.
Eleventh is the final walkthrough one of the last steps before closing the deal to make sure that the property has no damage or nothing has been removed that is included in the purchase.Buyer should make sure that there is no damage by thoroughly walking through the property.
Final step in closing deal is signing all the required papers which are critical step where all the people involved in the process such as the mortgage lender and lawyer would be awaiting to get it sign. Read each page paper carefully like the fine prints have a major impact on the finance. Also making sure the interest rates are correct and there is no payment penalty. Comparing the closing cost and estimates given in the beginning of the process.
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