Steps to Closing Real Estate
A real estate closing is usually a long and stressful process that involves many steps and procedural formalities. “Closing” happens when you sign the papers that make the house yours, but before that day arrives, there are a lot of steps to take.
Here are 12 steps that should be taken from the moment your offer is accepted to the moment you get the keys to your new home.
Step 1. Open an escrow account
A home sale involves multiple steps taken over a span of weeks, so the best way to prevent the seller or the buyer from being cheated is to have a neutral third party hold all the money and documents related to the transaction until the real estate is settled.
Step 2. Title search & insurance
A title search and title insurance provide peace of mind and a legal safeguard, so when you buy a property, no one can try to claim it later.
Step 3. Hire an attorney
Getting legal aid is optional; however, it is always better to get a professional legal opinion on your closing documents.
Step 4. Negotiate procedural costs
If you speak up and stand your ground, you can usually get “junk fees” and other charges eliminated or at least reduced before you go to closing.
Step 5. Complete the home inspection
A home inspection, an examination of the condition of a real estate property, is a necessary step to discover any issues with the property and get a look at its surroundings.
Step 6. Complete the pest inspection
The pest inspection is separate from the home inspection; it involves a specialist making sure that your home does not have any wood-destroying insects, such as termites or ants.
Step 7. Renegotiate the offer
Even if your purchase offer has already been accepted, if the inspections reveal any issues, you may want to renegotiate the home’s purchase price so that it reflects the cost of any necessary repairs.
Step 8. Lock in your interest rate
It is advisable, if possible, to lock in the interest rate for the loan in advance, rather than experiencing market fluctuations – which could cause rates to rise before you finalize your property purchase.
Step 9. Meet contingencies
Your real estate offer should be contingent upon the following things:
- Obtaining financing at an interest rate that doesn’t exceed what you can afford
- The home inspection not revealing any major issues with the home
- The seller fully disclosing any known issues with the home
- The pest inspection not revealing any major infestations/damage to the home
- The seller completing any necessary repairs
Step 10. Timed funding requirements
To complete your home purchase, you will have to deposit additional funds into escrow. The original earnest money is generally applied to the down payment, so it is important to arrange for the various additional payments (required at various times) before the deal is closed.
Step 11. Final walkthrough
One of the last steps before you sign your closing papers should be a final walkthrough of the property to ensure that there isn’t any damage or required fixes.
Step 12. Understand the papers
Paperwork is critical to closing a home property deal. Even though the papers may be filled with complex legal terms and jargon, you should still read all of it yourself. If you don’t understand something, you can consult a real estate attorney.
Though it may seem like the home closing process is a lot of difficult work, it is worth the time and effort to get things right instead of rushing and signing a deal you don’t understand.
To learn more about real estate closings and processes, contact our team at Matheson Law Firm, P.A. online or call us at (704) 439-1350 today.