Everyone knows when a real estate deal closes: It’s when you get the keys to the house and the sellers get their money. But when does the closing process actually begin? In truth, it starts when you make an offer to purchase. How that offer is written up determines what steps you have to take in order to eventually receive possession of your new home.
There are many steps involved in the closing. These can include getting financing, clearing contingencies and title, and paying closing costs. There also can be many stumbling blocks. For example, your lender or escrow company may charge excessive garbage fees or may refuse to fund, or the escrow holder may make mistakes, or clouds (defects) may appear on the title. Or it could go quickly and smoothly.
To get started, it’s important that you have a sense of what’s involved in a typical residential real estate closing. So here it is, step by step:
- Present a written offer to the seller.
- Have the seller accept and sign your offer.
- Open an escrow account, negotiate the escrow and title costs, and sign the preliminary instructions.
- Secure financing, and negotiate lender closing costs. (You should already be preapproved for financing.)
- Read and approve the seller’s disclosures.
- Obtain and approve a professional property inspection, and approve other reports as needed.
- Check the title and remove contingencies from your offer.
- Complete any remaining escrow work, and do the final walk-through.
- Get funded by your lender.
- Sign the final escrow instructions (also called closing the escrow), and pay your remaining down payment and closing costs.
None of it is hard to do. If you do it correctly, you’ll soon be receiving the key to your new home. And you’ll be able to tell everyone what a terrific deal you got!