The Closing Process Explained

You’ve gone through the long, arduous process of buying or selling a home, and now it’s time to close the deal. Although the real estate closing process is the final step in a real estate transaction, it’s a very busy time with a lot of moving parts. Knowing what to expect is key to ensuring you’re closing is smooth and stress-free.

What is the Real Estate Closing Process?

Closing is the legal transfer of property from seller to buyer. It’s a complex process involving various parties, extensive paperwork, and meticulous coordination among everyone involved. The entire process takes 30 to 45 days, but can be longer due to issues such as financing delays, appraisal issues, title problems, and home inspection repairs.

Who Handles the Real Estate Closing Process?

The buyer’s agent is typically the main coordinator of the process, but there are many other professionals involved, including:

• The lender who processes the buyer’s loan application and provides the final loan documents.
• A title company which conducts a title search.
• A home inspector who evaluates the property’s condition and recommends repairs prior to closing.
• An appraiser who determines the fair market value of the property for the lender.
• The seller’s agent, who helps coordinate the tasks involved in the closing and keeps the seller informed about the real estate closing process.
• A real estate lawyer, who reviews the documentation.

Home Closing Timeline

The real estate closing process typically follows a predictable timeline that includes these steps:

Offer Acceptance

The real estate closing process starts when the seller accepts the buyer’s offer. The buyer’s earnest money is deposited and held in escrow until the closing date.

Due Diligence Step

The next step in the closing process involves multiple parties who help the buyer and the lender do their due diligence, where the home and the financing are concerned. This step includes:

• Home inspection to look for issues that require repair prior to closing.
• Appraisal to ensure the home’s value is consistent with the loan amount.
• Loan application completion.
• Title search to ensure the seller is the legal owner of the home and that there are no outstanding liens or other title-related issues.
• Survey of the property, if required.

Home Inspection Review

At this stage of the real estate closing process, the buyers go through the home inspector’s report. If there are major issues found, the buyer and their agent negotiate with the seller to do the repairs or to make other concessions. These concessions might include lowering the price of the home or covering part of the closing costs.

Offers are typically contingent on the home inspection, so if the sellers are unwilling to make the necessary concessions, the buyer can back out of the deal.

Final Preparations

At this point, you’re almost done, but the busiest part of the process still lies ahead. This stage includes:

• A final walkthrough to ensure that the required repairs have been done and that nothing about the property has changed during the closing period.
• Finalizing home insurance and title insurance.
• Final loan approval.
• Review of the seller’s disclosure.
• Preparation of funds for closing day.

Closing Day

The final step in the real estate closing process is the day the deal actually closes. It’s a hectic time for all parties and their agents, each with their own responsibilities in coordination with the others.

The closing typically takes 1 to 3 hours and involves reviewing and signing numerous documents, including:

• Loan documents.
• Final financial statement showing all costs.
• Title insurance policies.
• Homeowner’s association documents, if applicable.
• Property disclosures and warranties.

The buyer’s funds are then transferred and distributed to all applicable parties. This includes payment to the seller, discharge of outstanding liens and mortgages, and payment of real estate commissions and closing costs.

In the final step of the real estate closing process, the keys and access codes are transferred from the seller to the buyer, the deed is recorded by the applicable county or municipality, and possession of the property officially transfers to the new owner.

Who Does What in the Real Estate Closing Process?

The closing process can be confusing, with multiple tasks and responsibilities for all parties. Your real estate agent will make things as smooth as possible for you. To keep track of what happens at closing, and who’s responsible for each task, keep this table handy, checking off the tasks as you go.