The time between signing a contract and closing a sale is a busy one for buyers, their real estate agents and the title company. Your agreement of sale is signed and the home selected is officially under contract. Now it’s time to satisfy all the terms of your contract. The seller has relatively little to do at this point. The buyer and the agent, on the other hand, will be very busy for the next four to eight weeks as they work toward closing.
1. Title Company
The title company will be the one to verify if the property has a clear title. They’ll investigate the property’s history of ownership to find out whether or not another party has any claim to the property, judgments, or liens. If they discover that the other party has a “cloud” on the deed, the title company will work on the deed to be cleared. However, the best and sole solution for clear title is a title insurance which most of the lenders require when the buyer is borrowing money to finance the purchase.
Once the Title company has started your title search, your real estate agent will be providing most of the information to them. It will also come in handy if you get to know your Escrow agent because they will be needing information from you from time to time. Some of the information they’ll need are payoff information if you have a mortgage, copy of documents of the purchases is deeded to a trust, LLC, or corporation, copy of documents if you are divorced or your spouses is deceased, and even if the deed is under one name, in Texas, both husband and wife needs to sign at closing. Also, confidential information such as social security numbers, mortgages, etc., is better provided to the Title company by the buyers for security reasons.
2. Mortgage Applications
If the buyer is not paying cash, they must apply for financing & be approved within the period of time specified in the sales contract. The earlier the application is made, the better. That way, if the lender requires additional documentation later in the underwriting process, the buyer is more likely to have time to submit it well in advance of closing. This time can vary greatly depending on the lender so getting all necessary paperwork in as soon as possible is a must. It is an excellent idea to have this application in place and a letter of pre-qualification written BEFORE a buyer begins their search for just the right property. It can actually help your negotiations when purchasing. Picking a lender is more important than you might imagine. Every link in the chain of this transaction has to be strong. The buyer, seller, REALTOR®, escrow agent at the title company, the lender, and the insurance agent need to be knowledgeable. Consult your REALTOR® about the best choices. They are very familiar with the ones that will make it a smooth closing and those that will not.
3. Inspections
If the buyer elects to have the home inspected, the inspections will be ordered very shortly after the contract is signed. The inspector will examine the structure of the building and determine whether or not the home’s systems — electrical, plumbing and heating/cooling — are functioning properly. He’ll also look for signs of poor drainage. Water and air quality tests also may be done, and the inspector may look for signs of termites, too. If the inspections show that repairs need to be made, the agents will help the buyer and seller negotiate a solution. The buyer may agree to accept the home “as is” or the seller may agree to do some or all of the repairs. Occasionally, they have been known to reduce the sales price so that the buyer can make the repairs later, after closing.
4. Homeowner’s Insurance
If the buyer is financing the home purchase, his lender will require that he purchase insurance, for the sake of protecting its investment. Although the buyer isn’t responsible for insuring the home until closing, it’s prudent to start shopping for a policy early, as many sales contracts are contingent on the home being insurable. There are cases that the condition of the home is uninsurable and it is always best to know it sooner rather than later. In Texas, a lender will require that you provide flood, windstorm, and homeowner’s policies. They can vary greatly depending on the area you have chosen and the insurance company.
5. Condos
If the buyer chooses to purchase a condo, there are certificates and addendums that are specific to the sale. A local REALTOR® that has experience in this area is important. There is also a condo declaration that will be provided to the buyer. It will lay out the rules and regulations for that particular building. The Resale Certificate for that Homeowner’s Association is an important source of information about that association. It will give you the budget, an insurance summary, disclosure of any pending assessments or lawsuits, and information about who to contact in that building for HOA information. We do advise our buyers to contact the President of the board or the building manager to ask questions about the property. All of these documents are unique and will probably require some explanation from your REALTOR®. It is advisable to work with a real estate agent who is an expert in this area.
6. Closing
The transfer of ownership from the seller to the buyer occurs at closing. The closing is scheduled as soon as all the terms of the agreement and all the conditions of financing have been met. After signing at closing and recording of the deed, the buyer cannot take possession until this transaction is funded. That means that the title company has paid the seller and recorded the deed. Sometimes, the lenders take an additional one to three days to fund so be sure to check and not assume you can move in that day. These are the basic process from a signed contract until closing. There are many variables, emotions, personalities, legalities and new laws each year to complicate this processes. Be sure to work only with a knowledgeable and credible realtor to work with especially if you are planning to purchase a condo. If you are buying a condo, it is especially important to select a Realtor who has experience in condo sales. As always, we are here to help and hope you select one of our knowledgeable team to represent you in this important purchase.