Author: Larry @Glasgow Invests
Selling a house can be an intimidating process full of drawbacks and unexpected circumstances. That goes up double if you’re selling a house for the first time and don’t understand how the housing market and closing process works. If you don’t know what to expect, you could miss out on opportunities or fail to make back the investment you were hoping for.
There are plenty of alternatives when selling a house. You can use an agent to list it on the market. You can go the “for sale by owner” route which comes with lots of complications. Or you can sell the house as-is to a cash buyer who will make you an offer quickly.
But if you do decide to go the real estate agent route and list on the open market, when you eventually find a buyer, you’re going to need to know what to expect during the closing process. Keep reading to find out everything that you need to know to navigate the closing process successfully.
What Sellers need to know in the House Closing Process In Memphis TN
What is the Closing Process?
So once you accept a buyer’s offer on your property and begin to transfer money and documents in order to transfer ownership to them, you are in the closing process. This process can be quick or can take a few months as there are a lot of things that need to be handled. When you decide to accept a buyer’s offer you just don’t hand them the keys. The steps below are all of the important ones that have to happen before you can get to the closing date when ownership of the property is officially transferred.
Putting Money Into Escrow
It takes awhile from the agreement of the sale price to the closing date and typically both parties want some kind of assurance that the other side won’t just back out for no reason. To protect against this, neutral third parties called escrow accounts act as a bridge between the two and hold onto down payments and documentation until the entire process has been settled one way or another. Once that’s happened, the seller gets the money and the buyer gets the documentation.
Start the Title Search
Titles are very important because it’s how you prove true ownership of a property. So one of the first things that have to be done is a title search. It’s how they determine that you are the legal owner of the property. It’s also a way to find out what kind of claims, such as liens, might be attached to the property. If any liens are discovered, they will need to be resolved in some way before the transaction can continue.
Another important part of this step is making sure that there is title insurance in place. This protects the seller from any financial losses sustained from title issues. It also protects owners and lenders against any damages that come from liens or defects in the title.
Hire A Real Estate Attorney
This step may or may not be a requirement in your state but first-time sellers should absolutely consider hiring an attorney who specializes in closing documents. There is a lot of complicated jargon and language in property documents that can easily overwhelm and confuse sellers. For a nominal fee, a real estate attorney can provide you with plenty of benefits, including being able to spot potential issues in the paperwork that most people wouldn’t see. So I would definitely recommend hiring a real estate attorney to assist you with the closing process
Negotiate Your Fees
Every new person, company, or document that gets involved in your real estate closing comes with a cost. If you’re not careful, those costs can become extremely expensive as some lenders/companies hike up fees because regular people don’t understand them. And if you haven’t had a proper discussion about them beforehand, you could get stuck with a bill you never planned for.
Start thinking about what’s going to come up during the process. Admin fees, application review fees, appraisal fees, processing fees, etc. Take a close look at the details and exactly what these fees include (or don’t include). If you can, speak up about those fees that don’t feel right and see if you can get at least some of those junk fees reduced or eliminated.
Get a Home Inspection
Unless it’s a sellers’ market and you’ve got the buyer to agree to no inspection, you’re going to have to let them bring in a home inspector to take a look around at the condition of the property. Hopefully, you’ve done a pre-inspection so you’re aware of what might come up. However, if the inspector does find any serious issues with the house, the buyer will likely want to renegotiate the terms of the deal or may even back out entirely. Be prepared for the buyer to try to find ways to cut the cost in order to make up for any perceived issues and push back if you don’t agree.
Get Pest Inspection
Along with the home inspection, a pest inspection follows the same guidelines and calls for a specialist to make sure the property isn’t infested with termites, carpenter ants, rats, or any other animals that could cause damage. Even small infestations can scare off buyers and lenders. If it’s determined that extermination needs to take place, you’re going to have to find a way to get it done without paying extensively.
Remove the Contingencies
Presumably, when you agreed on a sale price, several contingencies were put in place that needed to happen before the sale could be closed. They might include the buyer obtaining financing at a certain interest rate, a positive home inspection, disclosures about any previously unknown issues, and any agreed-upon needed repairs. As these contingencies are met they should be removed from the purchase offer in order to signal that everyone has done what they needed to. If they haven’t been dealt with, that could be grounds for cancellation of the deal.
Do a Final Walkthrough
Before you and the buyer sign on the dotted line, they should do one more walkthrough of the house or property just to make sure they can see that everything is as it should be. It’s also a good way to confirm that repairs have been done, issues have been solved, no new problems have occurred, and nothing that was supposed to be included in the sale has been removed
The Closing Date
On the closing date, the escrow accounts open up, both sides get what they agreed to in the sale, and ownership is officially transferred. It will require a lot of paperwork, so make sure you are either very clear about what you are signing or you have an expert available to walk you through it. Don’t be afraid to ask questions and get clarifications. This is important.