Real estate closing is a complicated process requiring several steps to complete before officially buying or selling a property. As a first-time homebuyer or seller, understanding the basic steps of real estate closing bridges the knowledge gaps to make the process flawless and faster.
In this article, we will define what a real estate closing is, how long it takes, and the basic steps involved in the process everyone should know.
What Is Real Estate Closing?
Real estate closing is the last step in the property buying and selling process. Once the seller officially accepts the offer on the property, a purchase agreement is prepared, and the closing date is announced after agreement from both parties.
How Long Does It Take To Complete A Real Estate Closing Process?
Based on the contract terms, type of financing method, or any other issue that might arise along the process, real estate closing can take a few days, weeks, or up to 60 days.
Most real estate closing steps happen simultaneously. And this is why it is crucial to have effective real estate closing software and a real estate agent to help push the process and collaborate with different parties in the transaction.
Though this process varies from state to state, these steps remain the same across all states. Read on for more.
Basic Steps of A Real Estate Closing Process.
Open An Escrow And Deposit Funds In It.
Most property contracts allow sellers to pick a title company or an estate attorney to represent them as a third party in the transaction.
After signing the contract, the real estate agent or seller notify the attorney or the title company of the transaction and sends a copy of the completed agreement requesting the buyer to open an escrow account.
Regardless of the payment mode agreed on in the contract, the buyer deposits money in the chosen payment account within the stipulated timeframe, which is mostly48 to 72 hours from the contract execution time.
Perform A Title Search And Obtain A Title Insurance.
With the help of real estate closing software, the real estate agent orders a title search to ensure the buyer has become the legal owner of the property. It is at this stage that the title insurance is issued to the buyer to protect them from past events that may come back to affect the property.
Complete The Property Inspection.
While this is not a mandatory requirement in the closing process, some buyers insist on doing it to confirm hidden mistakes with the property.
Typically, inspection confirms the functionality, safety, and quality of the property’s features. This process is performed immediately after accepting the buying offer.
Arrange For Lenders Appraisal.
In case the buyer has borrowed the money to buy the property, the lender will prepare a professional appraisal to ensure the lender that the property has the same market value as the borrowed money if there might be a need to repossess the home.
Final Walkthrough and Inspection.
Generally, this process happens 24 hours before the closing period. The real estate agent and the buyer walks-through and inspect the property once more to ensure everything is as described.
They will confirm if all the necessary repairs are completed, the property is damage-free and clean, and all the previous owner’s belongings are removed unless it was arranged that some should stay.
Real estate closing is a time-consuming process that requires a joint force of a real estate agent, attorney, or title company to ensure it runs smoothly. Nevertheless, follow the steps discussed herein for seamless property closing.