The closing process to a real estate transaction is more than just that final meeting where the buyer signs paperwork and gets the keys. It can take weeks or months and begins when the buyer makes the initial offer.
The basic timeline generally unfolds as follows:
Step 1: Initial offer and negotiations.
Once the buyer and seller agree to a purchase price, the process moves on in preparation for closing the deal.
Step 2: Use of an escrow account.
It is important to use a neutral third-party to hold funds on behalf of both the buyer and the seller.
Step 3: Thorough title search.
This is a deep dive into the legal paperwork tied to the property. It makes sure that the title transfers to the new owner without encumbrances. Without a complete title search the new owner could find themselves subject to a lien or other collection efforts for outstanding debt tied to the property. This can come from outstanding tax bills, construction or remodeling costs.
Step 4: Preparation and review of paperwork.
The details will vary depending on the transaction, but these documents can include a promissory note, warranty deed, bill of sale, and closing disclosure. Make sure you understand these documents before moving forward. You do not have to use boilerplate forms. You can have these documents drafted to your specific transaction to better ensure it protects your interests.
Step 5: Final walkthrough and signing of documents
Ideally, if all the previous steps are taken, this is the easiest and final step. A final walkthrough ensures the property is in the same condition as it was when you negotiated the purchase price. The signatures at this time should be on documents that you or your legal counsel have already reviewed. Now you can pick up the keys and move into your new home.