Real estate transactions
Step-by-Step Real Estate Transaction
- 1 Real Estate Transaction Checklist
- 2 What Does a Real Estate Lawyer Do?
- 3 How Do I Understand Real Estate Transactions?
- 4 Closing Check List for a Real Estate Agent
Buying a home is a big purchase with many different components being juggled all at once. While a good real estate agent helps buyers navigate the process as it occurs, having a solid understanding of what happens prevents confusion and frustration. Missing deadlines for can lead to costly mistakes and even losing a dream home. Know what your responsibilities are and how you can exit the deal if something doesn’t seem right.
The written, formal real estate contract lists the price and the ideal terms for a potential sale. The buyer presents a formal, written offer stating the offered price in the next step. The buyer also agrees or counters the terms of the sale as outlined by the seller, including the length of time allowed to close the sale. When the two sides come to an agreement on all points, both sign the official sales contract.
Opening escrow is the next step after both buyer and seller sign the sales contract. Escrow describes the neutral party holding the contracts and funds involved in the transaction. Not all areas use escrow, and in some places an attorney serves as an escrow officer. Escrow ensures all parties meet the terms as outlined in the contract. All money channels through escrow and is released according to the sales agreement. Some escrow offices combine the legal title search of the property to ensure the owner has the right to sell the real estate. Some regions use a separate title office that submits the property title report to the escrow service for official approval by both the lender and the new buyer.
Inspections occur within the first few days of the contract agreement. Possible inspections include a search for insect infestation, quality of the roof and an inspection covering appliances and heating and cooling systems. Some inspectors handle multiple evaluations during a single general inspection. The buyer must include the request to hire professional inspectors in the contract agreement, and the buyer generally pays the cost for the inspections. As a secondary set of contingencies that may result in further inspections is the seller’s disclosures of what they have done to the home and what is known to be a problem.
The next step involves mortgage approval. The sales contract lists the number of days allowed to obtain a new loan when the buyer needs a mortgage to pay for the property. The lending process typically requires an escrow period of between 30 and 60 days to complete the underwriting examination of the worth of the house and the creditworthiness of the new buyer.
The final step to close the transaction requires the seller to transfer the legal title, or the deed in some states, to the new owner. At the closing, both buyer and seller receive the final closing documents, including title and loan paperwork, and the house keys change hands. The title company will record the transaction with the county assessor’s or recorder’s office to put the new owner’s name on record.