Just because you’ve found a buyer and reached an agreed upon price, it doesn’t mean the process is over. Now you have to close the deal.
Closing can be the most complicated part of a real estate transaction. For example, a sale agreement sets not only the purchase price of the property, but it also establishes a set of terms and conditions the must be met for the sale to go through. Here are some possible complications to closing:
- A contract almost always depends on the ability of the buyer to obtain a loan, which is another reason most sellers prefer a buyer who already has obtained a preapproval letter from a lender. No loan, no sale.
- An ever-increasing number of transactions involve a home inspection or some other type of review of the property by a trained, independent third party. If the inspection is not satisfactory, the deal can be cancelled or delayed.
- Lenders set forth a number of conditions that must be met before granting a loan. Some of the things a typical lender will want include a title examination, title insurance to protect against errors, termite inspections and an appraisal to ensure that the property has the proper value to secure the loan.
The time to close varies with each transaction, although the typical time frame is within 30 to 45 days from the time an agreement is reached. This is because it takes time to arrange financing, conduct an inspection and get an appraisal. It also takes the seller time to move out.
Experts advise against waiting too long as well. If your closing takes place 60 or more days following a sale agreement, it can be difficult to lock down an interest rate, and if rates go up, it may mean the buyer is no longer able to afford the home.
Closing also is known as “settlement” or “escrow” in some areas. It boils down to a closing agent taking money from the buyers, paying money to the owners and ensuring that the title is properly recorded in local records.
The closing agent also reviews the sale agreement to see what payments and credits the owner should receive and what amounts are due from the buyer. The agent also makes sure that specific transaction fees are paid (taxes and title searches, for instance).
The best advice from experts is to look over the sales agreement and look at what you’ve promised or been promised in return. If the agreement says the seller will repaint a room or fix a window, that task must be completed before closing.