If you’re a first-time home seller, the closing process may seem overwhelming. You just want to sell your home quickly, but there’s a long list of steps to take (and expenses to incur) before the deal is official.

If you know what to expect, you can close the sale of your home in a timely manner with as few surprises as possible. Here’s what you need to know about the home closing process, from start to finish.

What is closing of a house?

Closing is the phase in the home selling process when money and documents are transferred in order to transfer ownership of the property to the buyer.

The closing date is the date ownership of the property is officially transferred from the seller to the buyer; it’s an exciting moment. The home closing process is all of the steps that are outlined in the sale contract that must happen from the time you accept the buyer’s offer to the closing date.

What are the steps to closing on a house?

You’ve finished negotiations and accepted an offer from a buyer. Congratulations! Now, there are a few things to take care of:

Do a title search and obtain title insurance

Your closing agent will order a title search, which is a review of public records to make sure you’re the legal owner of your property. If there are any claims or judgments against the property, the title search should uncover them. These issues must be resolved for the sale to move forward.

Unlike homeowners insurance which helps protect against future events like a fire, title insurance helps protect against past events affecting your home. For example, if you later found out the home you purchased has a lien for unpaid bills, title insurance would typically have you covered.

Complete the home inspection

A home inspection isn’t required, but many buyers insist on it to ensure there are no hidden problems with the property. The inspection will take place shortly after you accept the buyer’s offer.

If your home is in need of any repairs, let your agent know if you haven’t already done so. They may recommend that you make these repairs before the home inspection to avoid any potential issues.

An inspection will typically examine the safety, functionality, and quality of the home’s features. Here are some of the most common items our home assessment team looks for.

Depending on the contingencies outlined in the sale contract, the buyer can ask you to remedy any major repairs before closing or ask for a price reduction to cover the costs of making the repairs.

Don’t forget lender appraisal

If the buyer is borrowing money for the purchase, the mortgage lender will arrange for a professional appraisal. This is done so the lender can be confident that the amount of money it’s lending to the buyer is in line with the market value of the home in case the lender needs to repossess the house. The appraisal is based on the estimated value of the home’s individual features, as well as comparable homes that have sold recently nearby.

If your home appraises below the sale price, lenders are unlikely to approve a loan to the buyer for that amount. If this happens, you will either have to ask the buyer to make up the difference, lower the sale price, or challenge the appraisal. Your agent or attorney can guide you through this process.

Final walk-through

The final walk-through typically occurs 24 hours before closing. The buyer and their agent will walk through the property one last time to make sure everything is in order.

They will check that all required repairs have been made, that the property is clean and damage-free, and that all of your possessions have been removed unless you’ve arranged for certain items to stay. If the buyer discovers anything problematic, you’ll need to address it or the closing might be delayed.

Finalizing the sale on the closing date

The closing date is when the sale transaction is officially completed. You will sign a lot of paperwork, including signing the deed to the property over to the buyer. Don’t be afraid to ask your attorney or escrow agent about any documents you don’t understand. You have the right to know what you’re signing.

The closing will take place at the office of your escrow agent, title agent, or attorney. Depending on your state, you might not be required to attend the closing. Ask your real estate agent or attorney if your attendance is mandatory, or if you may sign the paperwork ahead of time. If so, your agent or attorney will provide it at the closing.

Once all paperwork has been signed and funds have been disbursed, the buyer is officially the new owner of the property.

What are the seller’s responsibilities during closing?

Both parties have obligations to fulfill under the sales contract. During the closing process, you’ll typically be required to:

  • Remove all your possessions from the property, unless they’re specified to stay under the contract. Major appliances, for instance, are sometimes negotiated into a deal.
  • Make any repairs you have agreed to make.
  • Clean the home right before the closing date. A good rule of thumb is to leave it as clean as you’d like to find it if you were the buyer. (Typically required unless the home is sold in as-is condition.)

These items aren’t typically required but they’re either a good idea to consider or a nice gesture for the new owner:

  • Notify subscription services, creditors and acquaintances of your new address and set up mail forwarding.
  • Collect any manuals and warranties you have for items in the home, such as the HVAC system and any appliances you’re leaving behind. Leave them on the kitchen counter for the buyer, along with any spare keys and garage door openers.
  • Shut off water valves to prevent any leaks between the time the buyer takes possession and the time they actually move in.

Some states and municipalities have additional requirements, so check with your real estate agent or attorney. For example, your state may require a septic system inspection, or a smoke and carbon monoxide detector certificate.

What are the buyer’s responsibilities during closing?

During the closing process, buyers are typically required to:

  • Make an “earnest money” deposit into an escrow account, where funds allocated for closing costs will be held by a third party until the closing date.
  • Provide any documentation and information requested by the lender in the loan underwriting process.
  • Obtain homeowners insurance. Many mortgage lenders require evidence of coverage to approve the loan.
  • Arrange for utilities to be transferred into their name effective on the closing date.
  • Perform a final walk-through.

How much are closing costs – and who pays them?

Closing costs range between 1 percent to 7 percent of the sale price of the home, split between both parties. Home sellers usually pay between 1 percent to 3 percent of the final sale price, according to Realtor.com.

ER Office
Author: ER Office

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