Selling a home is a monumental task in general. In today’s market it is that much more of a Herculean accomplishment! Once you are able to obtain a fully executed contract you have got a good “start,” but take it from someone who has done it a few times, not every contract makes it through closing! A typical home sale involves more than 20 steps after the contract is accepted all the way through settlement.
From the point of being under contract, much of the responsibility of dealing with appraisers, loan processors, attorneys, and inspectors typically falls on the shoulders of the Realtor. The Realtor’s role is normally to help facilitate those tasks and responsibilities, helping to make sure that others do their jobs promptly and correctly, and that the contract isn’t jeopardized at any step in the process.
There are many steps between contract and closing, which involve the cooperation of both buyer and seller, and attentive Realtors on both sides will troubleshoot and keep everyone heading in the right direction. If you are considering buying or selling a home without the benefit of a Realtor, I hope the following information is useful in making your way through to a successful closing.
Home Selling from Contract to Closing the Sale
| Home Sellers | Home Buyers |
| 1. Select an escrow agent. In the State of Georgia this is a closing or real estate attorney. As the Seller you should consider going ahead and selecting an escrow agent to hold the earnest money. The escrow agent will also collect all the necessary documentation from each side, do the title search, and will conduct the closing. |
1. Providing earnest money funds. When you provide a check to the Seller, make sure you understand that earnest money funds are deposited according to and treated based upon instructions in the contract. This should include who will hold the deposit, whether or not interest is to be accrued, and conditions of release if the contract does not go through. These funds are applied to the down payment at closing. |
| 2. Provide home owner’s association (HOA) documents. Sellers who live in neighborhoods that have a home owner’s association must financial statements and recent reports to the buyer for review as well as to the escrow or closing agent for inclusion in the settlement statement. |
2. Make loan application. If rates are low and as they are today there could be a long list of homeowners refinancing so make sure you give yourself additional time for the mortgage process. If the property is being financed with a FHA, or USDA backed loan for example, it may be required to obtain copies of building permits or warranties for any remodeling, repairs, or additions done by the current owner. |
| 3. Title searches are a must. In this day and time with tax and other workman liens on properties, not to mention those associated with equity lines and other, a title search examines all filed public records to determine any issues in the “chain of title;” to confirm that the seller owns the property, has the right to sell the property, and that no liens are present that could affect the Buyer. |
3. Time for the home appraisal. Lenders will require an appraisal well before getting to the closing table. Appraisers compare the home to similar comparable properties to provide an opinion on the property’s value. |
| 4. Request a payoff statement from your lender. Ask your current lender to provide a payoff statement for the closing agent for the settlement statement. |
4. Property surveys tell the tale. A property survey reveals boundary lines on a given property. More importantly the survey identifies any existing easements or encroachments by you or others. |
| 5. Be available to open home for appraisal and various inspections. Arrangements for access to the property must be made for the lender’s appraisal and any inspections as specified (or not) in the contract. |
5. Order inspections. Most contracts have a “due diligence” period in which you should order property inspections. These may include a general overall home inspection, radon, lead (if built before 1976), mold, and termite inspections. Inspections should be ordered just as soon as the contract is fully approved and your due diligence time clock starts ticking! If any problems or issues come out of the due diligence phase of the contract any problems should be negotiated. Realtors typically have long relationships with inspectors and various contractors to help make sure that “their” transactions get priority during hectic times. |
| 6. Final utility readings and payments Remember to contact utility companies for final readings and make sure you are paid and up to date so that there is an easy transition for your buyer at closing. |
6. Employment and other financials Lenders will require you to verify both your employment and financials before committing to the loan to ensure that there have not been significant changes since the process began. |
| 7. If in the contract, obtain a home warranty policy
If you as the seller have offered a home warranty, you must obtain this policy before closing. |
7. Purchase homeowner’s insurance. Homeowner’s insurance is required by lenders and based upon your survey flood insurance might also be required. |
| 8. Complete all agreed repairs If you have agreed to make repairs as a result of a home inspection these must be completed before closing and you should be ready to have a copy of a paid invoice from a qualified contractor showing the work was completed. Don’t forget also that if repairs require a building permit, sellers must apply for one as soon as possible to ward off possibly delaying closing. |
8. Title insurance Title insurance will be required by your lender to make sure that title defects not showing up currently on title will not make a property unsaleable in the future. This only protects your lender, not you personally. You as the Buyer have an opportunity to purchase a owner’s title insurance policy as well for your own personal benefit. |
| 9. Deed Preparation The warranty deed is the document by which the owner transfers title of the property to the buyer. |
9. Obtain a loan commitment. Stay in contact with your lender and make sure they notify the escrow agent of your loan commitment as well as have them confirm settlement date. |
| 10. Transfer taxes Most states require a tax on transfer of property. Normally this cost is the responsibility of the seller. City and county governments may also charge transfer taxes. The escrow agent will know what and who to charge. |
10. The transfer utilities Make arrangements to have utilities transferred into your name(s) as of the date of settlement or closing. |
| 11. Complete the final walkthrough. Especially on new construction, but on resales as well, buyers should walk through the property before closing to make sure that the property is being delivered in the condition agreed to in the contract for purchase and sale. |
Delays and What they Cost You
When things go wrong, and they can if you are not on top of them, closing can easily become extended affairs. The following shows how much time to expect on possible delays:
1-Week Delays
- Buyer submits incomplete information to lender.
- Source of Buyer down payment changes.
- Closing Agent fails to notify parties promptly about missing documents.
- Buyer or Seller leave town without signing all necessary documents.
- Upon Inspection defects are discovered in the property.
- Last-minute liens discovered clouding title.
- Cloud on title for other.
- Buyer or Seller move-out date changes.
2-Week Delays
- Lender decides after review that it cannot approve of borrower or property.
- Rate change(s)
- Lender (or Gov’t Agency backing loan such as FHA) requires additional appraisal or repairs or verification of repairs.
- Appraisal comes back low.
Remember that as a Realtor I have experience in dealing with problems that can and do arise during the time between contract acceptance and closing. To be able to anticipate issues and know how to address them in the most expedient time frame ensures a smooth settlement for all involved.
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