Selling a property the traditional way is a long-lasting and stressful process that involves many steps and procedures. Even when you’ve found what seems to be a perfect buyer who got approved for a loan, there is still one final step – the house closing process.
If you are a first-time homeseller, the house closing process probably sounds overwhelming. The only thing you’ve wanted was to sell your property as fast as possible, but the process seems to never end. More experienced homesellers are probably prepared for this, but sometimes even they don’t know all the requirements and necessary steps. If you want to learn more about the house closing process and how to make it as quick as possible, keep on reading.
What Is a House Closing Process?
Closing a sale is the last part in the homeselling process that includes transfer of money and paperwork in purpose of giving the ownership of a property to a buyer. The closing date is the moment when the ownership is officially transferred from one person to another. This process has several requirements in order to be completed, and it starts the moment you have accepted the buyers offer and ends with the date of the closing.
Necessary Steps in the House Closing Process
Once the house closing process has started, there are still a few things that you have to take care of.
Obtain title insurance
You will be required to do a title search, or in other words the public records will be searched to ensure that you truly are a legal owner of your house. If there were ever any judgments or claims against your property, this search will uncover them. Keep in mind that these issues will have to be resolved before you can move forward with the house closing process. After that, you can go on to get a title insurance.
What is title insurance? Title insurance is a type of indemnity insurance that serves as a protection of both lenders and homebuyers in case there is a defect in a title to a property that can lead to a financial loss. For example, imagine if the property you’ve just bought has a lien for unpaid bills. Title insurance will cover this, instead of you having to pay for the debt from your own pocket.
Who pays the title insurance? This depends on the state and its regulations. In some areas, it is possible for buyer and seller to make a deal about who will cover these expenses.
Ordering a home inspection isn’t necessary, but buyers are always recommended to insist on it, so they can be ensured that there aren’t any undisclosed issues with the property. This inspection takes place shortly after you’ve accepted the buyer’s offer. It is a good idea to prepare for the inspection by paying for one yourself, in advance. This is a good way to make sure that everything truly is alright and that you can’t be held responsible for anything. Also, this will give you an upper hand, as you’ll have time to fix anything that might be broken. If the home inspection ordered by the buyer finds that anything is wrong or unsafe, the buyer might be allowed to ask you to either fix the problems by yourself and cover all the expenses, or to reduce a price. This is why it is recommended that you sell your house to a direct buyer, especially if you have a run-down property, as they will buy your house as-is.
Keep in mind that you are legally required to disclose everything that is wrong with the property! It is better to disclose every little detail than to be responsible for anything that you might have kept hidden. If you forgot to disclose something – or even worse, if you’ve purposely remained quiet – you might even end up in a court.
In most cases, especially if the buyer is working with a lender, a professional appraisal will be required. This is done so that the lender can be ensured that the amount of money the buyer is asking for is truly in line with the market value of home. This way, lenders are protecting themselves in case a foreclosure happens. The appraisal is done the similar way as estimating a house’s value beforehand, by comparing prices of similar homes in the area that have sold recently, and by looking at home’s individual features.
This is why it’s important to correctly determine the value of your home before you list it on the market. If the sale price is a lot higher than the appraised one, the lender most likely won’t approve the loan. If this happens to be the case, you can still negotiate with the buyer to compensate for the price difference or you can decide to lower the price for the house to be able to sell. You can even change the appraisal with the help of your lawyer. This is another reason why it’s safer to work with direct buyers, as they will pay you in cash and you won’t have to worry about a mortgage being approved.
When everything else is said and done in the home closing process, some 24 hours before closing you will most likely be expected to do a final walk-through. In other words, the buyer will go for one final check-up of your property. This is most likely expected to happen if you had to do some repairs on the property after the inspection, as the buyer will want to ensure that everything is done correctly. Also, a buyer will want to make sure that you have removed all your personal belongings and that the property is clean, without any new or unnoticed damages. If a buyer notices something that he doesn’t like, you might have to delay the closing date once again so you have the time to address and repair it.
Finally, you have completed all the preparations. The final step of the home closing process is finalizing the sale and completing the transaction. Prepare yourself for a lot of paperwork and ensure that you have your lawyer with you to help you with any documents that might confuse you. You have to know exactly what you are signing.
You won’t be required to bring a lot of things with yourself on the closing date. Usually, the required items are a government-issued photo ID, property keys and any documents and paperwork you were instructed to bring. This might include proof of completion of additional repairs that the buyer requested.
In fact, in many cases you won’t even be required to personally attend the closing. This depends on your state. On some occasions, you might be able to sign the paperwork beforehand, and on others you will still have to appear in your attorney’s or escrow agent’s office.
Once the funds are transferred and the documents are signed, the buyer becomes a new owner of the property and the home closing process is finally completed.
What Are Sellers Responsibilities During a Home Closing Process?
Both parties have a certain set of obligations that they have to fulfill. These obligations are determined by the sales contract, but also state laws. Typically, as a seller, you will be required to:
- Remove all your personal belongings from the property, except those that you’re selling with your house, such as large appliances.
- Make any necessary repairs.
- Before you leave, clean your property. Leave it as clean as you’d like to find it, if you are a buyer.
There are some additional things that you might want to consider, such as notify subscription services of your move and shut off water valves to prevent any leaks from happening while there is no one there in the property. It is also a nice gesture to collect any warranties and manuals for appliances that you are selling with your house and leave them on a kitchen counter or some other easy-to-see spot, for the buyer to find.
Keep in mind that some states might have a longer list of requirements. Be sure to contact your lawyer or to do some research on the state law by yourself, to ensure that you have completed every step.
As for the price of a home closing process, this also depends on the state regulations. Usually, the closing costs are between 1% and 7% of the sale price, which is split between both parties. This can pile up to be a nice amount.
How Long Does a Home Closing Process Last?
In traditional sales, the whole house closing process usually lasts around 50 days. The buyer’s lender will be underwriting and originating the loan to ensure that the buyer qualifies. This time-consuming process is the major cause of a delay. In fact, about one third of all traditional closings end up being delayed, so if you list with an agent be prepared for that possibility. Not to mention how long it can take if you end up having issues with some of the above mentioned steps!
This is why it is always recommended to sell your house to a local direct buyer, such as Sparks Property Investors LLC, if you are wishing to make a quick sale of your property. When you sell to Sparks Property Investors LLC, you won’t have to worry about the lengthy house closing process. We will take care of everything, buy property as-is, and you won’t have to worry about any expenses. And the best part is – we can close the sale for as quick as 7 days!
If you want to learn more about selling your house to a direct buyer, we have good news! You can download our guide to real estate investing HERE.