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Seller References
Step 6:
Close
7 Steps to
House Selling Success!
Step 6 of 7
It might seem
as though once a sale agreement has been signed that the selling
process is complete. Not only is it not over yet, but some of
the most complex aspects of a real estate transaction now begin.
A sale
agreement sets not only a purchase price for the home, but also
a series of terms and conditions. For instance:
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Contracts routinely depend
on the ability of a buyer to obtain financing, which is why
most sellers prefer buyers with preapproval letters from
lenders.
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A growing percentage of
transactions involve a home inspection, or a physical review
of the home by a trained and independent observer.
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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.
The REALTOR®
typically arranges required inspections and helps the owner
prepare for closing.
When should you
close?
With automation now available, 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?
Closing -- or "settlement" or "escrow" as it is known in some
areas -- is essentially a meeting where the closing agent (the
party who conducts settlement) takes in money from the buyers,
pays out money to the owner and makes sure that the purchaser's
title is properly recorded in local records along with any
mortgage liens.
The closing
agent reviews the sale agreement to determine what payments and
credits the owner should receive and what amounts are due from
the buyer. The closing agent also assures that certain
transaction costs are paid (taxes and title searches).
Closing is also
the time when "adjustments" will be made. For instance, suppose
you've pre-paid taxes four months in advance. In this case, the
closing agent will compensate you for the prepayment at closing
by having the buyer pay you additional money.
It could also
work in reverse. If you are behind on property taxes, the
closing agent will reduce the money due to you at settlement by
the amount of the unpaid taxes.
How do you
prepare to sell?
It's important to look at the sale agreement and review your
obligations. For instance, if you have agreed to paint a room or
replace the dishwasher, such work must be completed before
closing. Your REALTOR® can discuss your agreement and the steps
which must be taken to complete the transaction.
The closing
agent will handle both the settlement papers and related
documents.
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Estate