Curve

The home closing process for sellers

Gina Pogol
The Mortgage Reports contributor

In this article:

During a real estate closing, you will transfer the legal ownership of your home to your buyer.

  • Your purchase agreement includes a closing date. There may also be provisions for extending that date
  • At closing, all the funds needed to complete the transaction — including a down payment, closing costs and any borrowed money — must be transferred into escrow and ready for distribution
  • You and the buyer sign a set of documents agreeing to the conditions of the transfer
  • You give the buyer a set of keys, receive your money, and vacate the property

A smooth closing is what all buyers and sellers want. Here’s what you can do to make it go that way.

Verify your new rate (Sep 16th, 2019)

What is a real estate closing?

Real estate closings go by different names, depending on where you live.

In some parts of the country, they’re known as “closings” and in others, they’re known as “settlements.”

Related: What does an escrow company do?

Regardless of where you live, however, the purpose of a closing is the same — to legally transfer ownership from seller to buyer. For homes financed with a mortgage, the buyer also approves the terms of the loan and accepts the money to complete the transaction.

Prepare to close on your home sale

Before closing can take place, both you and the buyer must have completed all required conditions. For buyers, this usually means securing final mortgage approval and bringing the funds needed to close to the title company or attorney handling the transaction.

For you, the seller, it may mean completing repairs listed on the buyer’s inspection report or agreed-upon during your negotiations with the buyer.

Related: What happens when I am “clear to close?”

You’ll likely need someone to inspect and sign off on the repairs — the inspector, appraiser or the buyer.

You may also need to clear up any legal issues that make the property ineligible for title insurance. Mortgage companies won’t finance properties with uninsurable titles, and few buyers want to buy a home that might not be legally yours to sell.

Finally, address issues noted by the home appraiser — like code violations or zoning problems, or health and safety concerns. Make sure you take care of these things as soon as possible because you don’t want to be out of contract and lose your sale.

Home selling: Between contract and closing

The path to your closing begins the day you sign your purchase agreement.

This agreement between all interested parties sets your closing date and location.

Typically, you’ll schedule your closing between 30 and 60 days out. However, a cash buyer wanting a quick closing may take possession of your home in just a few days.

This period between contract and closing is sometimes called “escrow.”  Your home sale is pending, but not yet complete.

It’s during this time that the buyer performs additional due diligence, including ordering an inspection of your home.

Related: What happens after I accept the buyer’s offer?

According to Ellie Mae’s Origination Insight Report, the average number of days required to close on a purchase loan was 46 days (October 2018).

If you, as we recommend, sell to a buyer who has been pre-approved for a mortgage, you can expect the process to take less time. That’s because the buyer has credit approval and the lender only needs to approve the property.

You can expedite this process by being available to home appraisers and inspectors, having the home in good shape for them to easily assess it, and being able to answer any questions they have.

Once completed, the lender will issue a final underwriting approval to your buyer. This is known as being “clear-to-close.”

You’ll want to prepare to move your things out as escrow ends, leaving your home move-in ready for your buyer. Your buyer will probably want to do a final walk-through before signing off on the purchase. Don’t blow the deal at the eleventh hour by turning the place into a pigsty.

Home selling: closing day

Closings typically take place at a title company or attorney’s office, depending on local custom.

The transfer of money to you generally takes two steps (unless it’s an all-cash deal).

The buyer brings in the remaining portion of his or her down payment if needed. This is the down payment amount minus any earnest money paid into escrow when you accepted the offer. In addition, the buyer will bring in money to cover his or her closing costs.

Only wired funds or a cashiers check are acceptable for this — no personal checks.

The second step, if needed, is the transfer of funds from the mortgage lender. That money makes up the difference between the buyer’s down payment and the home sale price.

Related: How to choose the right closing date

Once all needed are funds are in escrow, the title company or attorney pays all fees associated with the transaction, clears any mortgage you have on the property.

Next, an escrow officer or attorney records the transfer from you to the buyer. It is public, usually overseen by your county recorder’s office.

Finally, the title company cuts you a check or executes a transfer for the money you’re entitled to receive.

To keep your closing going smoothly, make sure to pack a valid government ID. This can be your driver’s license, your passport, or anything else you use to identify yourself officially.

You will complete the transfer and your buyer becomes a homeowner.

Verify your new rate (Sep 16th, 2019)