Buying a home can be a long and complicated process but it can also be a rewarding one because you end up with your very own house at the end. The actual transaction in which money is exchanged and the home is transferred to you is referred to as a real estate closing, but there are a lot of steps that lead up to the closing to ensure that it goes smoothly. Understanding the real estate closing process is important when you are ready to buy your own home.
The Real Estate Closing Process
When you have found a home that you are interested in, the first step is to make a purchase offer to the sellers. The sellers can review the offer and can accept, decline or counter with their own offer. The offer that you write up and the counteroffer that they provide will also include other details about how the transaction will take place, such as when the closing date will be, when and why you might be able to back out of a sale, and conditions of the sale such as inspections.
Buyers and sellers can also negotiate other issues to include in this closing, such as the sale of appliances, furniture, lawn equipment or other items from the home seller that normally would not be included in a typical real estate sale.
If you agree on a price and terms-and-conditions of the offer, then the offer will be accepted by the sellers and the process of satisfying the conditions for sale can begin. This means that you will have scheduled inspections on the home, you will finalize the financing with the mortgage broker or bank that you are working with, and a title search will be performed to make sure that there are no outstanding claims on the house.
As the different steps of this pre-sale process take place, problems or issues may come up that will need to be addressed. For example, a home inspector may find that there is an unexpected issue with the house such as an air conditioner that does not work correctly, a clog in the sewer piping, or a host of other problems that may be hard to see at first glance when you look at a home. If problems are uncovered in the inspection, then the buyer and seller will need to make a decision on how to proceed. A buyer, for example, could ask that the seller make needed repairs on the home as a condition of the sale. The buyer could also ask for money to be taken off of the purchase price to allow the buyer to fix problems themselves.
The details about what will happen with the needed repairs must be negotiated among buyer and seller. The seller could agree to make the repairs or to take money off, or might decline to do so and say that they won’t come lower on the price. An agreement on these issues will need to be reached so that the transaction can move forward. If no agreement can be reached, then the buyer should be able to walk away from the deal based on the terms of the original offer agreement.
Provided that buyer and seller are able to work out repairs and provided that a title search comes back clear and financing is secured, a date for the real estate closing will be set. All parties will sign the relevant documents transferring money and ownership of the home and the transaction will be completed, normally in the office of a real estate agent, a title company or a real estate attorney. The transaction and the new deed will be recorded and the ownership of the home formally transferred to the brand new owners.