🏡 The Closing Process Explained: What Buyers and Sellers Should Know
The closing process is the final step in a real estate transaction, where ownership of the property is officially transferred from the seller to the buyer. While it’s an exciting moment, the process can feel overwhelming for both parties. To ease any uncertainties, let’s break down what buyers and sellers can expect during the closing process and how to prepare.
What Is the Closing Process?
The closing process involves signing legal documents, finalizing the financial details of the sale, and ensuring everything is in order before the property changes hands. This step requires coordination between buyers, sellers, lenders, real estate agents, and a title company or attorney, depending on local laws.
For buyers, closing means getting the keys to their new home. For sellers, it’s the moment the sale is completed, and they receive their proceeds.
Steps in the Closing Process
Escrow is Opened:Once the purchase agreement is signed, the escrow process begins. A neutral third party, such as an escrow company or attorney, holds all funds and documents until the closing is complete.
Title Search and Insurance:A title company conducts a title search to ensure the property is free of liens or disputes. Title insurance protects buyers and lenders from future claims on the property.
Home Inspection and Appraisal:Buyers complete any inspections and secure an appraisal to ensure the property’s value aligns with the loan amount. Sellers may need to address any required repairs or negotiate based on inspection findings.
Loan Approval:Buyers finalize their mortgage approval, which includes submitting required documents, such as proof of income and credit verification.
Review the Closing Disclosure:Buyers receive a Closing Disclosure at least three business days before closing. This document outlines the final terms of the loan, closing costs, and payment schedule.
Final Walkthrough:Buyers conduct a final walkthrough of the property to ensure it’s in the agreed-upon condition before signing the paperwork.
Sign the Paperwork:At the closing appointment, both parties sign the necessary documents. These include the deed transfer, loan documents (for buyers), and any additional disclosures required by law.
Transfer of Ownership:After all documents are signed and funds are transferred, the property title is officially recorded with the local government. At this point, buyers receive the keys, and sellers receive their proceeds.
Tips for Buyers
Save for Closing Costs: These typically range from 2% to 5% of the home’s purchase price. Be prepared to cover items like loan origination fees, title insurance, and prepaid taxes.
Stay Available: Be responsive to your lender and closing agent to avoid delays.
Double-Check Everything: Review all documents carefully and ensure the terms match your expectations.
Tips for Sellers
Have All Documents Ready: Be prepared to provide property disclosures, warranties, and any agreed-upon repair receipts.
Clean and Vacate the Property: Leave the home in move-in condition for the buyers.
Plan for Your Proceeds: Decide how to handle the funds from the sale, whether reinvesting or paying off other obligations.
