Close the Deal!

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

Once a contract for the purchase of a home has been accepted, a series of inspections and checks are typically required to satisfy buyers and lenders. I help my buyers complete the transaction process by assisting with the many requirements found in a typical sale agreement. I also helps my buyers prepare for closing, that is, finalizing the sale.

What’s in a Sale Agreement?

A sale agreement sets a purchase price for the home and a series of terms and conditions. For instance:

• Contracts routinely depend on the ability of a buyer to obtain financing and/or sell their current home, which is why most sellers prefer buyers with mortgage pre-approval letters.
• A growing percentage of transactions involve a home inspection, or a physical review of the home by a trained and independent observer. Generally the buyer’s agent arranges the inspections, which the buyer typically pays for.
• 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.

When Should You Close?

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 during Closing?

Before closing, buyers typically have a final opportunity to walk through the property to ensure that its condition has not materially changed since the sale agreement was signed.

“Closing” is usually a brief office meeting to sign the paperwork needed to complete the sale transaction. All necessary papers have been prepared by closing agents, title companies, lenders and lawyers. This paperwork reflects the sale agreement and allows all parties in the transaction to verify their interests.

Whatever the process, the outcome of the closing is the following:

• Property title is transferred from seller to buyer.
• The buyer receives the keys.
• The seller receives payment for the home.
• From the amount credited to the seller, the closing agent subtracts money to pay existing mortgage and other transaction costs.
• Deeds, loan papers, and other documents are prepared, signed and filed with local property record offices. Usually the closing agent also completes the paperwork needed to record the loan.
• Transfer taxes are paid and other claims settled (including closing costs, legal fees and adjustments).

After Closing

You've done it. You've looked at properties, made an offer, obtained financing and gone to closing. The home is yours. Is there any more to the home buying process? Whether you're a first-time buyer or a repeat buyer, there are several more steps you'll want to take.

Safeguard settlement papers:

Your settlement papers are extremely valuable, so hold onto them. In the short term, they can help establish tax deductions for the year in which the property was purchased. In the long term, they will be important for tax purposes when the property is sold, and in some cases, for calculating estate taxes.

Transfer utilities:

Confirm your property deed records:

Photograph or video record your possessions:

Get proper insurance coverage:

You should have fire, theft and liability insurance. As the value of your property increases such coverage should also be increased. Again, speak with your insurance professional for details.

Expect a “broom clean” home:

It is generally understood that sellers will leave homes "broom clean" when moving out, not "vacuumed" or "spotless." Broom clean makes sense because it means the house is ready to be painted and cleaned.

Enjoy your home: