We have all heard the word “closing” on a real estate deal from friends and relatives, but for people who have never been through the experience, they might not know what it means. In fact, closing on a real estate transaction can be somewhat complicated and a number of things need to happen before the closing can be finalized. Here’s what needs to be done:
— Open an escrow account: An escrow account involves giving all the money that will be used to buy the home to a third party to ensure that no one gets swindled in the deal.
— Complete a title search and buy title insurance: This ensures that the person from whom you’re buying the home does indeed own the home, and the insurance protects you if you make a mistake.
— Retain an attorney: Not everyone needs to have a lawyer, but considering the large-scale size of a home purchase transaction, it’s recommended to have a legal counselor on your side.
— Negotiate on closing costs: One of the biggest costs related to a home purchase is charged by the escrow company. Be sure to negotiate a fair price with the escrow provider and look for hidden fees.
— Carry out a home inspection: A home inspection is relatively inexpensive, often required by the mortgage provider, and it can help buyers be aware of serious and potentially expensive problems with the home. In addition, be sure to inspect for pests, like termites.
— Remove contingencies: This step involves the removal of contingencies in your purchase offer. Among standard contingencies would be that inspections did not reveal serious problems, and that the seller would be responsible for repairs needed following inspections.
— Fund the escrow account: In the first phase, the escrow account receives a smaller deposit of earnest money, which the seller receives if the buyer backs out of the deal. At this stage, the escrow account is funded fully with the price of the home.
— Final walkthrough and signing the closing papers: The final walk-through ensures that no damage has occurred and everything at the home is as it should be. Then it’s time to sign the hundreds of pages of paperwork that needs to be reviewed.
Closing on a real estate deal is clearly complicated. For this reason, many Minnesota residents choose to seek help from a lawyer when completing the process.
Source: Investopedia, “12 Steps To Closing A Real Estate Deal,” Amy Fontinelle, accessed Nov. 04, 2016