7 Steps to House-Selling Success (6 of 7)
Step 6: Closing
It might seem as though once
a sale agreement has been signed that the selling process is complete.
Not only is it not over yet, but some of the most complex aspects of a
real estate transaction now begin.
A sale agreement sets not only a purchase price for the home, but also a series of terms and conditions. For instance:
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Contracts routinely depend
on the ability of a buyer to obtain financing, which is why most
sellers prefer buyers with preapproval letters from lenders.
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A growing percentage of
transactions involve a home inspection, or a physical review of the
home by a trained and independent observer.
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Lenders will establish
numerous conditions before granting a loan. They will want a title
exam, title insurance to protect against title errors, termite
inspections, surveys and an appraisal to assure that the home has
sufficient value to secure the loan
The REALTOR® typically arranges required inspections and helps the owner prepare for closing.
When should you close?
With automation now available, closings can occur within a week in some
areas -- at least in theory. In practice, it takes time to arrange
financing, conduct inspections, obtain appraisals, locate replacement
housing, contact movers, pack and actually move.
While instant closings are
not practical, neither are closings too far in the future. The problem
with closings much past 60 days is that loan rates are difficult to
lock in. If mortgage rates go up, it's possible that the buyer will no
longer be able to afford the home and thus the deal may fall through. The result of these considerations is that most homes close 30 to 45 days after a sale agreement has been signed.
What happens?
Closing -- or "settlement" or "escrow" as it is known in some areas --
is essentially a meeting where the closing agent (the party who
conducts settlement) takes in money from the buyers, pays out money to
the owner and makes sure that the purchaser's title is properly
recorded in local records along with any mortgage liens.
The closing agent reviews
the sale agreement to determine what payments and credits the owner
should receive and what amounts are due from the buyer. The closing
agent also assures that certain transaction costs are paid (taxes and
title searches).
Closing is also the time
when "adjustments" will be made. For instance, suppose you've pre-paid
taxes four months in advance. In this case, the closing agent will
compensate you for the prepayment at closing by having the buyer pay
you additional money.
It could also work in
reverse. If you are behind on property taxes, the closing agent will
reduce the money due to you at settlement by the amount of the unpaid
taxes.
How do you prepare to sell?
It's important to look at the sale agreement and review your
obligations. For instance, if you have agreed to paint a room or
replace the dishwasher, such work must be completed before closing.
Your REALTOR® can discuss your agreement and the steps which must be
taken to complete the transaction.
The closing agent will handle both the settlement papers and related documents.
Filed under: Real Estate, Puerto Rico, selling, House, extra realty, bienes raices, warren, sell, condo, apartamento, casa