Real Estate Closing 101

By
Real Estate Agent with Exit Realty Bob Lamb & Associates

It might seem as though once a sale agreement has been signed that the selling process is complete. Not only is it not over yet, but some of the most complex aspects of a real estate transaction now begin.

A sale agreement sets not only a purchase price for the home, but also a series of terms and conditions. For instance:

Contracts routinely depend on the ability of a buyer to obtain financing, which is why most sellers prefer buyers with preapproval letters from lenders.
A growing percentage of transactions involve a home inspection, or a physical review of the home by a trained and independent observer.
Lenders will establish numerous conditions before granting a loan. They will want a title exam, title insurance to protect against title errors, termite inspections, surveys and an appraisal to assure that the home has sufficient value to secure the loan.
The REALTOR® typically arranges required inspections and helps the owner prepare for closing.

When should you close?
With automation now available, closings can occur within  a week in some areas -- at least in theory. In practice, it takes time to arrange financing, conduct inspections, obtain appraisals, locate replacement housing, contact movers, pack and actually move.

While instant closings are not practical, neither are closings too far in the future. The problem with closings much past 60 days is that loan rates are difficult to lock in. If mortgage rates go up, it's possible that the buyer will no longer be able to afford the home and thus the deal may fall through.

The result of these considerations is that most homes close 30 to 45 days after a sale agreement has been signed.

What happens?
Closing -- or "settlement" or "escrow" as it is known in some areas -- is essentially a meeting where the closing agent (the party who conducts settlement) takes in money from the buyers, pays out money to the owner and makes sure that the purchaser's title is properly recorded in local records along with any mortgage liens.

The closing agent reviews the sale agreement to determine what payments and credits the owner should receive and what amounts are due from the buyer. The closing agent also assures that certain transaction costs are paid (taxes and title searches).

Closing is also the time when "adjustments" will be made. For instance, suppose you've pre-paid taxes four months in advance. In this case, the closing agent will compensate you for the prepayment at closing by having the buyer pay you additional money.

It could also work in reverse. If you are behind on property taxes, the closing agent will reduce the money due to you at settlement by the amount of the unpaid taxes.

How do you prepare to sell?
It's important to look at the sale agreement and review your obligations. For instance, if you have agreed to paint a room or replace the dishwasher, such work must be completed before closing. Your REALTOR® can discuss your agreement and the steps which must be taken to complete the transaction.

The closing agent will handle both the settlement papers and related documents.

close

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Topic:
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Location:
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Tags:
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Rainmaker
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Bill Kennedy
Homes For Sale Greenville SC
Keller Williams Realty

Welcome to Active Rain! This is a great website for building your business, as well as learning from others.  Pat yourself on the back, because you made a GREAT choice in joining the blogosphere!

Write often, and write whatever comes to mind.  Blogs about personal topics and non-real estate items are often the best.  It helps your readers to bond with you, and ends up bringing you a lot of business!

Good luck with your future blogging.  Feel free to ask me any questions if you need a hand!

September 18, 2008 09:19 PM
Rainer
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Scott Magaw
The Bill Kennedy Team - Keller Williams Realty

Welcome to active rain! By joining our community, you have made a great choice, and a very profitable choice. This is a great site for learning as well as sharing. Check out some blogs, join some groups, and enjoy! -- Scott

September 18, 2008 09:27 PM
Rainer
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Ron Martin
Ron Martin Team
Keller Williams Realty

Good morning & welcome to Active Rain, You have joined an excellent site to receive free marketing, absorb more information from others, share ideas.  Be a blogger and have fun. If you have any clients moving to the Greenville, Spartanburg, & Anderson South Carolina area we are your team. We are on all three MLS. Great blog!  Keep it up. Again Welcome!!

September 19, 2008 04:23 AM
Rainer
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Yvette & Dennis Gardner
Keller Williams Realty, Spartanburg, SC

Welcome to the Active Rain community. You have chosen a great site with tons of information you can learn from.  Have fun with it and hope to see more of your blogs soon!  We have a team of four outstanding full time agents to assist your buyers and sellers in Spartanburg/Greenville, SC.  Again, welcome to AR!!

September 19, 2008 07:29 AM
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Lori Isaacson
Credit Restoration Consultants

Hi Brenda,

On behalf of Credit Restoration Consultants and the almost 110,000 members of Active Rain, I want to welcome you to the AR family. If you have any questions regarding credit repair, credit scores or any credit related issues including identity theft, please feel free to call or e-mail me. I hope you enjoy AR and keep on blogging.

Happy Friday

Lori Isaacson

September 19, 2008 09:02 AM
Ambassador
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Kirk Westervelt
Kirk Westervelt, Broker In Charge, Van West Realty - CDPE - Short Sale Agent - Home for Sale - Greenville, Simpsonville, SC
Van West Realty - Greenville, SC Realtor -Short Sale Expert!

Hello and welcome to Active Rain! I encourage you to learn from others, share your knowledge and experiences with all of us, enjoy yourself, and try to log in and join us in the Active Rain community as frequently as possible. I look forward to your future blogs and comments! Take care, --Kirk.

September 19, 2008 07:29 PM
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Welcome to active rain from http://www.mnlakeplace.com this site is a great site to learn from and interact with other Real Estate agents/Broker. 

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September 22, 2008 08:45 AM
Rainer
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Brenda Skees
Exit Realty Bob Lamb & Associates

Thanks to all that have welcomed me to AR. I look foward to reading all the comments and blogs.

Brenda Skees EXIT REALTY NETWORK TN.

October 22, 2008 07:58 AM
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Greg Gillespie
CRS TN & MS - Broker
Crye-Leike Realtors

Welcome and I hope you decide to stick around for a while and give it a chance to work.   It does take some daily effort, but it is worth it..

February 20, 2012 07:14 PM
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