The 12 Steps to Closing a Real Estate Transaction
Investing in property can be a very complicated process with a lot of moving pieces. To add, there will be deadlines for multiple stages and each, if missed, could derail the whole process. It is best to have a general understanding of the process and steps involved and that is what today’s post is all about. Here we will explore the 12 major steps involved with closing a real estate transaction.
- Create an Escrow Account – This is your first step and will create a neutral 3rd party that will hold funds and documents as this process runs its course.
- Get Title Insurance – This is the legal peace of mind that when you buy a property, you will be the owner and will be able to keep it in the event of any past issues with the property. These issues will be uncovered with a Title Search.
- Find an Attorney – This is optional but highly recommended as a certified real estate lawyer can assist with the terminology and best practices on any contracts.
- Get pre-approved for a mortgage – This is also optional but will greatly speed up the closing process as it can help set budget and prove to sellers you have good financial standing.
- Lock your interest rate – Pre-approved mortgages offer the ability to lock in favorable interest rates, and if you have that ability it may make sense as any small changes in rate can greatly affect the amount of interest over the course of the loan.
- Negotiate Procedural Costs – There are always unnecessary fees within this process so make sure you are doing your due diligence in trying to negotiate those down or to have them removed.
- Complete home/pest inspection – These will give you a great understanding of what you are buying, what issues there may be, and the costs to get these fixed.
- Renegotiate after the inspection – At this point, you may want to negotiate any discoveries from your inspections to either reduce the costs or have the seller pay for fixes.
- Remove contingencies – With any good purchase offer, it will include contingencies that must be met in order to process the approval. These will have to be removed in writing by certain dates as per the approval document.
- Track time-bound funding requirements – It is important to add the necessary funds to the escrow for any additional payments outside of the down payment.
- Final Walkthrough – This is where you will do your final visual inspection to make sure no damage was done during the closing process.
- Signing the papers – This is the last step and the one where you will become a homeowner. What is most important here is to read all of the documents and ensure all details match previously agreed to terms.