Selling a house can be an overwhelming and exciting task at the same time. As a seller, you might want to celebrate when a buyer accepts your offer, but there are still steps you must complete before you start celebrating. Those steps include attending to important procedures that need finishing prior to closing. These steps largely revolve around the important financial and legal aspects of the sale, such as opening escrow accounts and negotiating closing costs. The entire closing process can drag on from 30 to 60 days due to home inspections and mortgage pre-approvals so you cannot just sit idle waiting for the days to go by; you have to actively engage in tackling these tasks at hand. Following these steps will help remove potential hindrances to a successful sale.
Open an Escrow Account
If you intend to transition from being a seller into a buyer, then setting up an escrow account is essential. To explain it in layman’s terms, think of escrow as your safety net. After setting up the account, you will appoint an unbiased third party (normally an attorney or a firm) to hold all the money and documents pertaining to the sale to provide a secure and fair transaction.
Both the buyer and the seller are protected this way: the money is only released once all the agreed-upon conditions have been completed. The included steps safeguard both parties, and simultaneously, make the process more structured and efficient. The financial aspects of the sale are being dealt with by professionals, so you can enjoy peace of mind.
Conduct Title Search and Obtain Insurance
Completing a title search and purchasing title insurance is next on the list. Both of these processes are for ensuring peace of mind. A title search is the process of analyzing public records to confirm legal ownership of the property and the discovering if there are any claims or liens associated with it.
Why is this significant? Picture selling your house only to find out that someone else has a legal claim on it. Title insurance covers that scenario and takes care of most disputes over the ownership of property titles. It is essentially a coverage blanket from the buyer being financially impacted due to a title defect. The expense associated with this insurance is a one-time payment that can save you a lot of trouble and money later on.
Performing a detailed title search and obtaining title insurance is like checking your exercise for errors; you are verifying that everything is accurate, correct, and free of risks. In this case, you are a responsible seller that provides not only a home but also tranquility to the new owner.
Hire a Real Estate Attorney
Although not compulsory in most cases, a real estate lawyer can prove invaluable when it comes to closing on a home. Real estate purchases are usually accompanied by a lot of paperwork, some of which are written in a very complicated legal language, which can be difficult to comprehend.
An experienced lawyer will simplify these documents as well as ensure that your interests are protected so that no harmful surprises pop up. In some states, a lawyer’s attendance at closing is mandatory, thus you would have to check your state laws to see if you need one. Regardless of whether it is mandatory or not, having an expert analyze the terms and conditions should make the process simpler and less stressful for you.
Inspection and Negotiation
In any business deal, a property inspection can reveal any potential risk which, if not addressed beforehand, can deter a person from going any further with the deal.
Complete Home and Pest Inspections
Engaging a professional to perform a comprehensive home inspection is a must for anyone contemplating purchasing a home. This step will ensure that any faulty issues are resolved before moving in like wiring, plumbing, and other structural issues. In addition to home inspections, pest inspections should also be scheduled especially for termites that destroy wood. Proactive measures should be taken first instead of treating a pest problem after it has worsened.
Renegotiate the Offer Based on Inspections
Renegotiation of the offer comes after hoping for the best in the report that comes after inspections have been done. Bear in mind if significant repairs or pest issues are suggested by the report, request the buyer to either reduce the price or take care of fixing expenses. In the same way, other parties may also choose to settle the problems before finalization of closing. A property which is described to be sold “as is” does not mean that one cannot negotiate for favorable prices.
Lock in Your Interest Rate and Consider Contingencies
Interest rates can shift at any moment, so it is wise to lock in your rate as soon as possible to protect against increases. Even the smallest changes in rates can greatly impact your monthly payments. While securing your rate, think about contingencies that still need to be resolved, such as getting financing or inspecting the property. Clear these conditions before finalizing in order to ensure a smooth closing day.
Financial Preparations
There are some financial boxes that need to be ticked off before you can fully finalize your house sale. Here’s how to get your finances in order:
Meet Funding Requirements
Your buyer has certain requirements which need to be satisfied before the sale goes through. As a seller, you need to track if any earnest money has been deposited. This money is usually considered part of the down payment, so it indicates that the buyer is serious about buying the house.
If the buyer fails to fulfill their portion of the deal, the earnest money is likely yours to take. But if the buyer side funding does not go through, then that means the sale is out of the window and all the prep work you have done is wasted. It is important to ensure that the buyer is on track to complying with all their financial obligations.
Prepare for Closing Costs
Do not forget that closing costs are not only the buyer’s concern but also the seller’s responsibility. These costs might range between 2% to 7% of the sale price of the house. This could include title insurance, escrow fees, attorney fees, etc. Knowing which fees you are responsible for can save you from unnecessary stress in the future.
This should be followed by a meeting with your realtor, where you will discuss seller associated costs. If there are any expenses that you believe are too high, it can be worthwhile to try negotiating. Having knowledge of all closing costs will enable you to better anticipate the financial challenges that come your way.
Conduct a Final Walk-Through
You must perform one final walk-through of the house before signing on the paperwork. Doing so will help you ascertain that the house is in the condition that was agreed upon and is ready for the new occupants.
- Verify Repairwork: Check that all the repairs that you agreed on have been completed. These include the ones that were found during the home inspection and the pest inspection.
- Make Sure There Are No New Damages: Most people will be far from delighted if they discover damages at the eleventh hour. Because of this, it is important to make sure that there is no new damage to the home since the last home inspection.
- Take Away Items: Make sure that any personal items that you did not wish to take for the sale have been cleared out. You must leave the property empty and clean, and sometimes this is a requirement in the purchase contract.
Reviewing and Signing the Paperwork
Take your time and make sure that before signing something, you have read the entire document thoroughly. You and the buyer might become heavily reliant on the information provided in the documents so make sure to check the fine print. Ensure that the details regarding interest rates, and terms that have been agreed upon are accurate. From the documents you got, compare the information with the Good Faith Estimate you were provided. Don’t be afraid to challenge any estimates that you think are unjustified. Obtaining feedback from your realtor could also prove useful.
If you run into words that confuse you, talking to a real estate lawyer is a good idea. A legal term may not be simple to interpret, but that is not an issue when you have a real estate lawyer. In addition, hiring a real estate agent could also be helpful. They could get you through all the tough bits that are not easy to go through. Just keep in mind, the pressure could build; the notary and the mortgage lender do not have time to waste, but don’t let them rush you into signing documents without the required comfort and understanding.
Conclusion
When it comes to finishing the process of selling your house, the first thing you need to keep in mind is that organization will make it easier for you. The whole pre-closing activities checklist completion turns the process from complicated to surprisingly easy.
As you head towards the closing of your home, it is important to ensure the paperwork is accurate and seek any assistance you may need from an agent or lawyer. If you’ve followed the process of selling your home step by step, then these final touches will come easy to you. Following these steps will ensure that you reach the closing with ease and hand over the keys to your new home with comfort and relief. Wishing you all the best!
FAQs
How Can I Reduce Closing Costs?
Take a moment to consider shopping for particular services, asking the seller for assistance, and reviewing them meticulously. Closing costs can often add anywhere from 2% to 7% of the home’s total price, especially when it comes to services such as lawyers, agents, and inspections. Whenever these services are deemed irrelevant or absurd, refer to them as “junk fees” and dispute them.
When Is It Too Late to Back Out of a Home Sale?
You can back out of a home sale before signing the contract. Once under contract, backing out depends on the terms and contingencies outlined within it, such as financing or inspection issues. Walking away outside these contingencies might result in forfeiting your earnest money.
Before the sale even begins, consider the rules and contingencies set forth in question, such as financing or inspection. Once the contract is signed, these steps will allow you to back out without putting down your earnest money. A good rule of thumb is to never walk away outside these contingencies.
Why Is a Final Walk-Through Important?
This is the final time for you to check what has or hasn’t changed since your last inspection and why it is important for the repairs that were previously agreed upon to be made. This is done to make certain that everything is in order and as expected before the hassle of paperwork is completed.
