Real Estate Closings
Real Estate Closings
A real estate closing is a transaction in which a buyer purchases a piece of property from a seller at a designated price. At the end of the transaction, the buyer walks away with a recorded deed and the seller walks away with a check. What, then, are the steps that lead to this end result?
First, it is important to ensure that the property is prepared to be sold. For land to be sold, the seller must ensure that they have an accurate legal description for the property and that their abstract has been recently updated. The seller may instead have title insurance if that is preferable. If the seller intends to sell a newly created subsection of their land, they must have the land platted by a surveyor and recorded by the county.
Once the property is prepared to be sold, it is best to have a purchase agreement drafted. Many closing agents will require a signed purchase agreement before a closing date can be scheduled. A purchase agreement lays out the terms of the transaction, such as the names of the parties, the legal description of the land to be sold, and the agreed-upon price.
After the purchase agreement has been drafted and signed by both parties, the purchase agreement must be submitted to the closing agent. The closing agent will be the entity that performs the final transaction of the deal, in which the money changes hands and the deed is signed. When selecting a closing agent, it is a good idea to discuss what services will and will not be included for the fee being paid.
Many closing agents will provide both parties with a settlement statement in the days leading up to the closing. The settlement statement will provide both parties with insight into the amount that each party is paying between the purchase price and the closing cost. Both parties will be able to review the settlement statement, keeping both parties on the same page regarding the allocation of all the costs associated with the closing.
If an abstract needs to be updated, a title opinion will be performed on the property. A title opinion confirms that the seller owns the land that they have agreed to sell to the buyer. A title opinion will uncover any title issues that may make it difficult or impossible for the seller to convey the land to the buyer as intended.
Once the following have been completed:
a purchase agreement has been signed;
a settlement statement has been agreed upon by the parties; and
a title opinion is performed, showing no title issues which would preclude the sale of the property, the seller will be able to reach out to the closing agent to schedule a closing date.
The closing itself is deceptively simple. At the closing, the seller will receive the funds for the transaction. The buyer will have conveyed the funds to the closing agent in the days leading up to the closing. Deadlines vary among closing agents. In exchange for the funds, the seller will sign a deed conveying the agreed-upon property to the buyer.
After the closing, the deed will need to be recorded with the county before the buyer can take possession. Recording times vary from county to county, but getting a deed recorded typically takes somewhere between one to two weeks. Once the deed has been recorded, the transaction is complete. The seller is free to enjoy the proceeds from the transaction, while the buyer is free to enjoy their new property.
Though closings can seem daunting at the outset, having a closing agent will provide for a smoother process overall. The buyer and seller will need only to provide the information regarding the transaction, approve the documents as they are drafted, secure funding for the transaction, and show up to the closing.
If you have any questions about real estate transactions, or more specifically, real estate closings, please feel free to reach out to the Boppre Law Firm for further discussion.