Whether you're upgrading, downsizing, relocating for work, or preparing to retire, the decision to buy or sell a home is difficult. Whatever the reason for your move, there is a lot that happens between the time a "For Sale" sign is pounded into the seller's yard and the buyer receives the keys to the new house.
First-time home buyers and sellers, in particular, may be unsure of what to expect at closing or what a closing comprises from beginning to end. The closing process covers everything happening between the time the seller accepts an offer and the close date or the date when the buyer formally acquires ownership of the home.
Here's a handy cheat sheet to assist you in comprehending each phase of the closing process:
Naturally, the seller's first action in the closing process is to market their home for sale. You must pick whether to work with a real estate agent (or listing agent) or sell the home yourself as the seller. An agent promotes the property, enters it into the MLS database, prepares paperwork, and communicates with the buyer's agent. The listing agent will often charge a commission for their services, which they will split with the buyer's agent.
Once your home is listed, you must keep it clean, nice, and clutter-free to accommodate showings, which is a key part of the selling process. Allowing as many potential buyers as possible to view your home may increase your chances of obtaining several bids. It's usually a good idea to leave the property so that prospective buyers may look around without being distracted.
Re-stage the home every day in preparation for impromptu showings. Setting up a few evenings each week for showings could be beneficial. You may also want to schedule viewings by appointment only to give yourself more time to prepare. Your agent will provide a lockbox so they can enter the residence at the agreed-upon time. Your realtor may also advise you to host an open house to reach out to a large number of potential purchasers in a single day.
After generating interest through showings, offers should begin to flood in - especially if your agent appropriately publicized and priced your home. In today's seller's market, this might happen as soon as your home hits the market. However, you may have to wait till after a few showings. In general, the better your home's condition, the more offers you'll receive and the easier it will be to justify the price.
A buyer's willingness to pay, suggested closing and occupancy dates, and any contingencies (such as the sale of the buyer's current home or a satisfactory home inspection) are typically included in an offer. Remember that the highest bid isn't always the best offer. For example, if the offer is contingent on the buyer's ability to finance the property, you could be back at square one. Your agent can help you assess the strength of each offer.
Negotiations between the seller and potential purchasers follow. If a seller receives an offer that they believe is too low, they can respond with a counteroffer to start the negotiating process. Furthermore, if a buyer is dissatisfied with the counter price, they may propose another compromise. Of course, negotiation strength is heavily influenced by market conditions.
In a seller's market, for example, buyers frequently lack bargaining strength. If a buyer's offer is too low or too laden with contingencies, the seller may choose not to negotiate. In addition, in a hot market, buyers must act swiftly, possibly making an offer the same day they visit the house. If you are a buyer who is not pre-approved for a loan, your offer will almost certainly be rejected in favor of buyers who can provide a pre-approval letter.
After the seller accepts an offer, the buyer must schedule a house inspection. In addition to an appraisal, the buyer will almost definitely seek a house inspection within a few days of signing the contract to ensure they're making a wise investment. A home inspector will look at the house's structure, roof, electrical system, and plumbing. They will also inspect the interior and exterior of the home for faults, dangers, or mechanical problems, as well as pests.
After the inspection, the inspector will provide the buyer with a report detailing what was inspected and which repairs may be required. The seller should have delivered their seller disclosures before signing the contract. Homeowners are obligated by law to provide a complete disclosure of any challenges they face while living in the house that may have an influence on the property value or appeal of the home. Owners of properties built before 1978, for example, must disclose the existence of lead-based paint. The buyer proceeds to the following level if everything appears to be in order.
The buyer should now proceed with the application for a mortgage loan from the lender of their choice. It's an excellent idea for a buyer to acquire quotations from multiple lenders, and you're not required to choose the lender who pre-approved you. Lenders will inquire about your earnings, job, debts, and assets. Prepare to present the following:
The lender can help you determine which type of mortgage is best for you. This could be a conventional or government-issued loan with a fixed or adjustable-rate mortgage (VA, FHA, USDA). You will be given a loan estimate that explains the terms of your loan, including expected closing costs, interest rate, and monthly payments (principal, interest, taxes, and insurance).
Following the signing of the real estate contract for the purchase and sale of the home by the buyer and seller, the seller's agent should deliver the contract and earnest money check to a reputable title business, which will develop a working file for the transaction. To protect both the buyer and seller, the title company will open an escrow account and hold the deposit and contract until the closing.
Shortly after handling your real estate contract, the title company will do a thorough title search to validate the property's legal ownership and find any claims or liens on the property. The company will then issue a title insurance commitment, which will be delivered to both the buyer and seller, as well as their agents, and will act as a guarantee to offer a title insurance policy for the property after closing.
Because the title commitment has the same terms, conditions, and exclusions as the actual insurance policy, the buyer should carefully review the document to identify any title problems. It could reveal whether the property has any easements, deed restrictions, or debts. If the buyer objects to an entry on the commitment, he or she must normally do so within a certain time frame, or the flaw will remain as an exception to the final policy.
Receiving mortgage approval, which can take several weeks, is an exciting moment in the closing process for buyers. Before approval, an underwriter will analyze your finances to see whether you can afford the house loan you want and whether the home you're buying provides appropriate collateral for the mortgage. After the underwriting staff has thoroughly evaluated your qualifying qualifications and awarded your loan final approval, you will be able to close on your loan.
When the buyer is ready to close, the parties must establish a closing date with the title firm. The closing will take place in your title agent's, real estate agent's, or attorney's office and will mark the completion of your real estate transaction. The parties should expect to sign a lot of documentation, including the deed to the property being transferred from the seller to the buyer. You may be able to sign portions of the documentation ahead of time in some situations. You could even be able to plan an online closing from the convenience of your own home or another place.
Once your closing date has been determined, the title company will begin preparing the real estate settlement documents for signature.
Buyer documentation could include:
Documents provided by the seller may include:
At the closing, the buyer is responsible for paying closing costs, the down payment, prepaid interest, property taxes, and insurance. Instead of a personal check, you must submit a cashier's check drawn out in the amount specified by your lender or title insurer before closing day. Your bank certifies that you have sufficient funds to pay the cashier's check amount. Depending on the amount needed for closing, the title firm may require you to use a wire transfer to transfer funds straight from your banking institution to the payee's.
On closing day, the parties may convene to sign the documents transferring ownership of the home to the buyer, as well as to pay closing costs, loan fees, and any relevant taxes. While you may be apprehensive as the big day approaches, you can put your mind at ease by gathering your papers, obtaining your cashier's check, and consulting with the title company and your real estate agent ahead of time. They will provide you with a list of items that you must bring to the closure.
Once the closing is complete, there are only a few things left to do, including:
After months of due research and preparation, it's time to celebrate - your closing has been
accomplished, and the buyer is now the official owner of the home!
We understand how stressful the process of buying or selling a home can be. Our knowledgeable title and closing specialists are here to answer your questions and help you with every part of your closing. We strive to make each transaction a great experience for all parties involved, whether you are a buyer or a seller.
Call us at 317-214-6023 to learn more.
Looking for the right house is both exciting and exhausting as it takes a lot of time, energy, and work. That’s why getting the help you need, such as from a real estate agent, is important. However, before looking for a real estate professional, it is necessary to take your time writing down questions that you might ask when viewing your potential home.
Make sure that you have a full understanding of the features you want. A little research won't hurt. And once you have the details, you can look and compare them when viewing houses until you have decided on the right house suitable for you and your family.
Having a real estate agent is important when viewing a house. They can look for a specific house you want or get a better understanding of what are the things you like or dislike in a home. They are also more knowledgeable in answering all your queries and questions and can also give you advice if a house is good or not based on what you want.
You should consider having your partner or family attend the house viewing so they can also see the house first-hand and you can both decide together. This will also save time on your and your agent's end by eliminating houses that are not to your liking. Conversation with your partner or family is important to determine what kind of house you will be having and for this reason, it's ideal for both of you to look at every house.
Bringing family doesn't mean you need to bring your children. It's best that you don't bring them with you as they will need more attention and you will likely not be able to focus on looking at or viewing the house. Though considering their ideas and opinions can help you choose a house, especially the young adults. You can write down their ideas and have that with you when viewing without bringing them.
While bringing a real estate agent is convenient, they are proposing and sometimes encouraging you with houses that are way out of your budget. It's tempting especially when you are carried away with excitement. It's ok if you do have a budget, but what if you don't have one? It'll disappoint you and stress you out. So, focus on viewing houses that are within your budget and you can also learn to say NO if it doesn't fit within your requirements.
Having research also on the location that you want will help you pick the right house. Make sure that you do like the place and the neighborhood you wanted to live in. Check if it's safe and a friendly environment. You don't want to be stressed out with it later on.
You can ask if you are wondering why the house is being sold. This way, you will know why such a beautiful home is being sold by the owner. Some reasons might be because it's too far from their work or could be that they are moving to another state or abroad. By knowing this you can negotiate with your real estate agent, especially if the owner is selling it in a rush.
Checking how long the property has been on the market should also be on your list of questions. If it's been on the market for quite a long time, you can ask why it isn't selling. Ask the real estate agent specifically if anyone else has previously made an offer and why they then decided to withdraw it.
Or it could be for another reason. Sometimes the property is just overpriced and it stays too long on the market. This can be a good opportunity for you to make an offer to lower the price of the house by knowing the value of the property as a start.
Do research on the area you want to live in or ask your real estate agent if there are natural calamities frequently happening. It might be floods, earthquakes, tornados, or typhoons, to name some. You can also check on the disaster map zone if the area is safe to live in.
Comparable Houses Within The Area
Look for comparable prices with other houses. The price or value of the house should be reasonable enough compared to other houses. If the costs are higher than expected, be prepared to negotiate if you want to make an offer. Having a lower offer could mean there is a problem with the home that they are not telling you about.
Taking a Good Look at the Utilities
Ask your real estate agent if the house has been on a house inspection, though it's really in the process you have to make sure that everything is good. You don't want to burn money on the things that the seller should have been responsible for. You might want to take a look at the attics, basements, sinks, heaters, furnace filters, breaker boxes, and other areas.
Although sellers won't reveal everything, you have to listen carefully to any information they will give you about the home's condition. You can also ask if the house has been on any additional renovation. Sometimes, additions or renovations aren't reflected in the house's official record.
Surveying markers are also important as they will determine the boundaries of your yard. Make sure to look for it and that there are no fences or other structures that are beyond the line.
Know If There Are Any Easements
An easement is a neighbor's legal right to access your property. This may happen if, for example, a shared driveway or parking lot begins on your property and branches off to other homes. So, before you make any plans for your yard, you should know if there is anything you cannot change.
Again, writing down the questions based on the requirements of your home is helpful and will save you a lot of time. The real estate agent may also suggest additional questions based on what you are looking for. It's also important to write down the answers on the properties that you've viewed that can help you in considering which house to buy. Getting answers and knowing what to expect can help make the home viewing and buying process go more smoothly.
The majority of real estate agents are paid commissions that are given directly to the brokers and are calculated as a percentage of the sale price of the property (commissions can also be flat fees, although such are considerably less frequent).
Real estate agents are salespeople with a license to conduct business under the supervision of a designated real estate broker, who makes sure the agents abide by local, state, and federal real estate regulations. Agents are not allowed to work on their own and cannot be paid directly by their clients in commissions.
Real estate agents are employed by brokers who are free to work on their own. One designated broker works out of each real estate office. All commissions must be paid directly to a broker, who divides them with any agents participating in the deal.
If they are members of the National Association of Realtors (NAR) and abide by its code of ethics, real estate brokers and agents may both use the title of Realtor.
A listing agreement is a contract that the seller and listing broker sign when a property is placed on the market. It specifies the listing's terms, including the broker's pay, which is typically a commission. The commission is always negotiable, it's vital to remember that. In reality, any attempt, however subtle, by members of the real estate industry to impose standard commission rates is illegal under federal antitrust law.
Although they could be greater or lower depending on the state of the market, commissions typically vary between 5% and 6% of the final transaction price.
The seller is responsible for paying the commission unless the buyer and seller agree on a split. It may be claimed that the buyer always pays at least some of the fee, either directly or indirectly, as the majority of sellers include the commission in the asking price (by an increased cost of purchase).
With their sponsoring brokers, the seller's agent and the buyer's agent have agreements that detail the agent's percentage of the commission. Any other split they choose is OK; it can be a 50/50 split between the broker and the agent.
Commissions are typically shared between multiple parties involved in a transaction or sale. The specific way commissions are shared depends on the industry, company policies, and the agreement between the parties.
In general, commissions are divided between the salesperson who made the sale and the company that they work for. The percentage of the commission that each party receives can vary depending on several factors such as the size of the sale, the type of product or service being sold, and the individual agreements between the salesperson and the company.
In some cases, commissions may also be shared between multiple salespeople who worked on the same sale or transaction. This may be done on a predetermined basis or through negotiation between the parties involved.
In addition, in industries such as real estate, commissions may also be shared between the buyer's agent and the seller's agent. Again, the specific percentage of the commission that each party receives can vary depending on several factors.
Ultimately, the specific way commissions are shared depends on the industry and the specific agreements and policies in place within that industry.