Real Estate Basics-Anatomy of a Closing

Posted by admin on July 24, 2010 under Real Estate License Basics | Be the First to Comment

Once you have your real estate license you will spend your entire career striving for the next closing. It this edition of Real Estate Basics we are going to breakdown this process to help you understand the anatomy of a closing. Your real estate courses will provide great detail of the closing process. For our purposes we will review the basic steps involved in a real estate closing.

In earlier editions of our series we have covered the real estate contract as well as sources of financing and how to qualify for a mortgage. All of these steps are leading us to a real estate closing. The closing is the completion of all of the contracts contingencies and the point where the title of the property actually changes hands.

The beginning of the closing process begins once the offer has been accepted. The buyer then provides an earnest money deposit to be held in escrow to secure the transaction. At this point the title check will begin. This is where a professional, it could be a title company, title agent of a title attorney depending on what state you are in, begins a search on the title of the property under contract. This is to ensure that the property is owned by the seller and is free of liens and encumbrances.

In the process of securing the financing they will need to complete the sale, buyers will be required to purchase homeowners insurance. Financing will not be approved until proof of insurance has been provided to the lender.

The next step involves disclosures, inspections and clearing contract contingencies. The seller is required to disclose any pertinent information on the condition of the property to the buyer. Home inspections will be done at this stage. With the disclosures and inspections satisfactorily completed, the real estate agent or broker will then work to remove any contingencies listed on the contract.

Most real estate closings require some sort of financing and the loan closing will happen simultaneously with the real estate closing. The lender will request an appraisal of the property value. With all of the steps required by the lender complete and a satisfactory appraisal, the lender will notify the title agent that the financing for the property has been approved. The loan closing documents are forwarded to the title agent for signature at the closing. The title agent will schedule the closing appointments for and the buyer and seller separately.

Estimates of settlement costs are provided to the buyer in advance with the final figures given to them upon loan approval. The buyer must secure a cashier’s check for the amount due at the closing appointment. The title agent will handle the request to pay off the sellers existing mortgage as well as the request for the release documents.

A typical closing will take 1-2 hours for the buyer. Many times the seller will have already signed the documents and at the closing appointment the buyer will be required to sign all of the title documents along with the mortgage closing documents. Once all of the signatures have been received, the property transfer will be recorded and the closing is complete.