The closing process includes the main steps that occur between signing a purchase agreement and handing over the keys to your home at the actual closing meeting.
Any money that has changed hands so far in the deal will be kept in escrow, a third-party account that neither the buyer nor seller can access. An escrow officer (usually hired by the seller’s agent) oversees the transfer of funds into escrow and handles various details of the closing process.
The Buyer’s Inspection
Buyers almost always commission a professional home inspection, regardless of whether the seller has already conducted an inspection. The purpose of the buyer’s inspection is to uncover any issues with the property that might affect its selling price or the terms of the deal. Most purchase agreements allow the buyer to renegotiate or walk, depending on the outcome of the home inspection. You have several options for dealing with necessary repairs, upgrades, or other problems that the inspection reveals:
- 1. Pay for and make the repairs before the closing.
- 2. Deposit money into escrow immediately that the buyer can use to make repairs after closing.
- 3. Reduce the selling price by an amount equal to the estimated cost of the repairs.
Most buyers prefer options 2 and 3, since those solutions are the easiest for the seller and allow the deal to proceed smoothly. They also allow the buyer to choose who does the repair work, which kinds of upgrades to make, and so on.
The Buyer’s Final Walkthrough
Your buyer will visit your home one final time before the closing to inspect the property and verify that its condition has not changed. This walkthrough usually occurs on the morning of the closing, or at most a few days prior. Though it’s unusual, occasionally buyers find problems during the walkthrough that can postpone the sale. At this stage, rather than make repairs, sellers usually agree to deposit money into escrow that the buyer can use to resolvethe problem.
The closing is the final meeting at which the buyer, seller, and their real estate agents and attorneys convene to finalize the transaction. The settlement agent-usually an attorney or escrow officer-runs the closing, overseeing the exchange of money and keys, and ensuring that the buyer and seller sign all the required documents to finalize the deal. It’s essential to read all these documents carefully to confirm that they reflect the terms of the deal accurately.
After the Closing
Most sellers agree to vacate the property on or just prior to the closing date. Be sure to plan your move well in advance to avoid delaying the buyer’s move-in date. A few weeks before your vacate date, contact your insurer to cancel or transfer your homeowner’s policy-the cancellation or transfer should take effect on the day the property officially changes hands. Also call your utility provider to cancel or transfer those accounts as well.