You’ve finally reached the final step in the residential real estate buying and selling process. After weeks or months of processing the papers, the only thing left to do is sign the documents and wait for the turnover of keys or release of keys.
To give you a summary of how a sale/ purchase of a home, we have listed 4 transactions involved:
- Real estate negotiation and execution of sales contract
- Pre-closing due diligence
- Real estate closing (you are currently here)
We know that you’re excited to be a homeowner or a successful seller but hold your horses! Closing the deal is as vital as the initial steps. It is crucial that when buying, selling, or refinancing a property, you will hire a top tier real estate agent and a legal professional. They will help you handle all the paperwork, so the only thing left is for you to sign the documents.
Read on to know more about residential closings and the typical activities/ transactions associated with closings.
What Are Residential Closings?
Residential closing is the final step in the residential real estate buying and selling process. The closing stage starts when the seller’s party has already accepted the offer of the buyer. Once accepted, you can now set a closing date.
During this stage, your real estate lawyer will meet you 2-3 days before the sale/ purchase date to discuss the purpose of the documents to be signed. Your lawyer is vital in this stage since he will accompany you and review the documents so that you won’t make mistakes.
Upon closing the deal, the property’s ownership is formally transferred from the seller to the buyer. The buyer may now freely start moving into the house or opt for renovations before moving in.
Process Of Closing A Residential Property Transaction
To reach the closing stage of a residential property, you still have to take other steps. This ensures that the property being sold/ bought will not cause further problems for both parties.
Here is a typical process to close a property:
- Open an Escrow Account
- Title Search and Insurance
- Hire an Attorney
- Negotiate Closing Costs
- Complete the Home Inspection
- Get a Pest Inspection
- Renegotiate the Offer
- Lock in Your Interest Rate
- Meet Funding Requirements
- Final Walk-Through
- Understand the Paperwork
This is a general process, and missing one or two doesn’t mean that the approach you took is wrong. We only presented our lawyers and their client’s usual process before closing the property’s sale/ purchase.
As listed above, there are a lot of things to do before closing a sale is done. These stages usually take a couple of weeks or months to complete depending on the property’s state and how responsive both sides are.
To reach the closing stage faster, you should hire a good real estate agent and lawyer to keep the flow going. Real estate agents and lawyers will be a big help since they already know the lender and the government’s requirements when a transfer of ownership is conducted.
How To Prepare Documents in Residential Closing Transactions
When dealing with legal and financial documents associated with closing residential purchases, it is essential to be careful and thorough. A mistake may prolong the process since you’d have to discuss the corrections with your lawyer and the other party before having the files changed.
We have listed here the files needed when closing a deal:
- The closing disclosure
- Title or warranty deed
- Monthly payment letter
- Proration papers
- Statement of identity
- Declaration of report
- Abstract or title
- Promissory note
- Truth in lending statement
The documents needed for your purchase will be based on the existing state laws in your area and the type of home you are buying. The documents listed are a full list of documents required in different places, so it is always best to consult your agent before preparing the documents.
Another tip for buyers is that you should’ve already prepared the documents needed so that you can shorten the processing time of your purchase.