Note from the editor: Martinson & Beason, P.C. is an amazing resource for real estate law. Since law is local, we have asked them to keep this post general so you can share these these articles with your clients who need to know what they can expect during the closing process. We appreciate Martinson & Beason, P.C. for providing us with this guest post.
By Morris Lilienthal, Martinson & Beason, P.C.
According to the National Association of Realtors, sales of existing homes increased by 2 percent during the month of October. On average, about five million existing homes are sold in the United States each year, with a much smaller, yet still significant number of new homes sold. Although the closing process differs somewhat between a newly-built home and an existing home, you can see that each and every day across America, thousands and thousands of people will be taking part in a real estate closing process. For those who have never gone through a real estate closing, the process can seem intimidating at best, yet, like any task, if you break it down into manageable “parts” it tends to make much more sense.
So, you’ve found your perfect home, negotiated a price you can live with, and secured a mortgage. Don’t breathe a sigh of relief just yet! Yes, you are in the home stretch, but you have one very important hurdle left to clear. Real estate closings are sometimes called “escrow,” or even the “settlement,” but basically your closing is the day when all those involved in the sale of your new home come together to make the transaction official, granting you ownership and a key to the front door.
Below is some basic closing process information to ensure you come through your real estate closing with flying colors.
- Patience really is an important virtue when you are involved in a real estate closing. Don’t try to run in on your lunch hour to take care of such an important task. Walter Walker, director of education and counseling for a housing counseling agency in Florida, advises buyers to schedule at least half a day for the closing, and, when possible to schedule your closing around the 20th or 25th of the month rather than the last day of the month—in the event unexpected issues arise.
- Make sure you have completed your final walk-through inspection 24 hours prior to your closing time. This is an important step—far too many home buyers skip this step only to find there was damage done to the home between contract and closing.
- Make sure you know what documents you will need at your closing, and that you have all the required documents in your possession at the closing. These documents may include proof of homeowner’s insurance as well as bank documents related to your mortgage approval and your inspection report.
- Make sure your down payment is in order. A personal check may not be accepted, therefore a wire transfer or cashier’s check could be necessary.
- Who will show up at your closing? Generally speaking, the home seller, the home buyer (you), the seller’s real estate agent, your real estate agent, a representative from the title company, the closing agent, attorneys for buyer and/or seller, and a representative from your lending company may take part in your closing—a pretty full table!
- You will sign many, many documents during the closing. Don’t be afraid to take the time to read these documents carefully, particularly if you don’t have an attorney at the table representing your interests. When possible, request copies prior to closing so you have an opportunity to read through and ask your attorney any questions.
What Could Go Wrong at Your Real Estate Closing?
Because the process seems fairly straightforward, you may wonder what could possibly go wrong at your real estate closing. In fact, there are a number of problems buyers have encountered, possibly the worst being a lender who pulls out at the last minute, a seller who hasn’t resolved existing liens on the property as promised, or a seller or buyer who balks at the fees associated with a real estate closing. In particular, if you are involved in a real estate closing at the last minute, it could be especially important to have a comprehensive real estate closing check list on hand to ensure no important details are lost in the rush. Of course, you should do everything in your control to ensure you don’t have a last-minute closing simply because this is an important process which, ideally, requires preparation for success.