Real Estate Closing Procedures

Sep 12, 2022 By Susan Kelly

Real estate transactions are notoriously time-consuming and nerve-wracking because of the numerous requirements and red tape involved. There is an extensive list of things that need to take place before the closing date on a property may occur. From the time your offer is accepted until you have the keys to your new house, this article outlines the steps that must be followed.

The Benefits of Getting Pre-Approved for a Mortgage

Unless you want to pay in whole with cash, it is prudent to have a mortgage in place before beginning your search. Most sellers may want a pre-approval letter from a buyer before they even consider working with them, but it is not required to finish a deal. Having one gives you greater negotiation leverage and can speed up the process. It shows the seller that you are a reliable buyer with substantial financial resources.

Create a Trust or Escrow Account

A third party acts as an intermediary and holds funds in escrow for the benefit of the buyer and seller. Selling a property can take many weeks and involves many different processes. Therefore, a neutral third party should be brought in to ensure that neither the vendor nor the buyer is taken advantage of. This third party can hold money and other transactional materials until a final resolution is reached. Once the necessary steps have been completed, the escrow company releases the funds and paperwork to the seller and buyer.

Insurance and Title Examining

A title search and title insurance may alleviate anxiety and protect you legally. They guarantee that no one else can challenge your ownership of a property after you've purchased it. A title search is an investigation into a piece of real estate's history to verify its current legal owner and uncover any claims that may be lodged against it.

Before the buyer may take possession of the property, all claims against it must be settled. Insurance against financial loss due to flaws in a property's title is known as "title insurance." It shields property owners and lenders against financial loss due to title flaws, encumbrances, or liens.

Consult a Lawyer

Having a lawyer review your closing paperwork is not required, but it is highly recommended. Even for highly educated people, their dense vocabulary may prove to be a formidable barrier to entry. An opinion from a knowledgeable real estate attorney may provide several advantages, including warning signs of any pitfalls in the documentation, for a reasonable charge.

Bargain Down Your Closing Fees

All the services and institutions involved in a real estate transaction have a price tag. If you're not cautious, these expenses may quickly add up. Examples of necessary inspections are those for both termites and structural damage. However, many of these firms take advantage of their customer's lack of knowledge by demanding exorbitant rates. Fees for legal services rendered at the closing table might also be overstated.

These expenses, known as "junk fees," are tacked on by the lender at the mortgage closing but are rarely disclosed to the borrower beforehand. The total of all of these charges might quickly become relatively high. Administrative costs, appraisal review fees, application review fees, ancillary fees, processing fees, and settlement fees all fall under the category of "junk fees."

Finish The Home Inspection

A thorough physical examination is required to identify any issues with the house and examine the surrounding area. A home inspection allows you to back out of the sale or have the seller make repairs if a significant issue is discovered. The buyer and seller might also agree to split the cost of repairs.

Get a Pest Checkup

Insect inspections are not part of a standard house inspection. A professional will check to see sure your home is free of termites and other wood-destroying insects. Infestations of pests may wreak havoc on homes constructed chiefly of wood. Minor bug problems are sometimes a deal breaker for mortgage lenders and must be resolved before closing.

Even a little infestation has the potential to cause significant damage that will be costly to remediate if allowed to grow. Pests that eat wood may be exterminated, but you should ensure the job can be done affordably. To top it all off, you may try negotiating with the seller to cover the pest control cost before finalizing the sale.

Final Verdict

It's better to take your time and ensure everything is in order throughout the closing process than to rush through it and sign a document you don't fully comprehend. Keep your guard up if you feel rushed into making a decision. All the people and organizations involved in supporting you will want a part of the action, but they won't be there to care if you make a lousy deal or not.

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