Portrait of a Real Estate Deal

Buyers get super excited once they find that perfect property. Sellers get excited once they finally get a decent offer on their property. After the initial excitement, reality kicks in and it’s time to protect one’s interests. For the buyer, the main concern is doing adequate due diligence before handing over a pile of cash or taking on a big mortgage loan. For the seller, the concern is making sure the transaction goes smoothly without losing money in the process.

Much of the due diligence starts with selecting a real estate agent that is not cookie-cutter but actually keeps the client’s best interest first and foremost. For buyers using a loan, it is also very important to pick an ethical and diligent loan officer. These two players – Realtors and Loan Officers – will have a big impact on how stressful, smooth, or sloppy the process goes. 

COMMON PLAYERS IN A SALE/PURCHASE TRANSACTION

Cash deals are finalized quicker since buyer has the funds ready -usually in 2 weeks to a month. Deals involving a lender typically take 60 days from Contract to Closing. That time frame can be affected by all the players listed below. Documentation, information, and services are requested from so many sources, before Closing documents can be finalized for Closing Day. 

  • Real Estate Agents
  • Surveyor
  • Lenders
  • Attorneys
  • Property Inspector
  • Appraiser
  • Title Company
  • Closing Agent
  • Homeowners’ Associations
  • Homeowners’ Insurance Company
  • County Records Office

TYPICAL TIMELINE OF A PURCHASE TRANSACTION

  1. Contract: This is after an offer has been made and accepted. The written contract can be drafted by either side and will specify key terms such as the Price, Closing Date, Down Payment Amount, Earnest Money Amount,  Survey Needed or Not, Right to Inspect, Title Company. Termination Clause, Who pays for What, etc.
  2. Survey: The Buyer can agree to use an existing survey, or order a new survey if the existing survey is very old, or if there isn’t a survey in the property records already. The survey shows the exact layout and boundaries of the property. Seller typically pays for the survey and the buyer receives a copy.  
  3. Inspection: The Buyer can order an Inspection by a professional inspector, or rely on his/her own visual inspection. The Inspection report may reveal certain defects that will influence the buying decision, or trigger renegotiation of the terms or the purchase price. Buyer typically pays for the inspection and is not required to share the Inspection Report with the seller. 
  4. Appraisal: This happens behind the scenes and is done by the buyer’s chosen lender, if buyer will be taking a loan. The appraised value gives the lender an idea how much money to actually lend to the buyer. The reason is that the collateral must be worth more than the loan. Costs of appraisal are billed to the buyer (factored into the loan). Both buyer and seller can request a copy. 
  5. Title Search: This is done behind the scenes by the chosen Title Company. The search of the property records is done to ensure that the seller has clear title to the property and that there are no outstanding liens or potential other claimants to title. The Title Insurance is issued afterwards and is a way for the Title Company to protect the buyer from any oversight in title search.
  6. Title Report: Both parties will receive the Title Search Report. If a party is represented by a real estate agent, the report is sent to the agent. It is important to review this report carefully for any issues detected, and also for any restrictions that may affect the use of the property. Most times, a lawyer is needed for a thorough review and understanding of the report.
  7. Title Issues Resolved: The Title Company may find some title issues and insist that some things need to be done/ resolved before it will insure title i.e. before closing can take place. If the things are not resolved, parties can still close if they wish, but the particular Title Company would not insure the title. Sometimes the issues to be resolved are not required by the Title Company, but by the buyer. If no resolution can be reached, the contract may be cancelled, depending on the terms of the contract.
  8. Closing Day: The parties will show up at the Title Company for Closing which means they will finalize the deal on that day. Parties will review the final settlement statement which is a statement that itemizes the purchase price, costs, expenses, taxes etc., and shows which side pays what (as agreed under the contract.) Parties will also review and sign all disclosures given to them, and also sign the deed transfer documents. Buyer’s funds are released to the Closing Agent on the Closing day. Buyer’s lender will require buyer to select a homeowners’ insurance company before closing date. 
  9. Money Transferred: This happens at Closing or shortly after. Closing Agent will transfer the funds to the seller, either from the buyer directly, or from buyer’s lender. This is done after all signatures are verified and on the deed transfer documents. If there is any money that was put down as Earnest Money or Down=Payment, that will be released to the appropriate party as well.
  10. Deed Documents Recorded: The newly signed deed documents are recorded into the property records by the Title Company’s agent. Once the recorded documents are made available by the county, the parties will receive a copy.

NOTE: This synopsis is for a typical real estate purchase/ sale deal, not for a refinance, brand new build, or other type of deal. For questions specific to your situation, please contact our office directly.

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