What to Expect: the Closing Process
After your offer has been accepted by the seller, there are still several steps you and/or your ZipRealty Realtor will need to complete to purchase the home. This is called the closing process.
- Earnest Money – After your offer is accepted, your first step is to write a check for the “earnest money deposit” (the deposit that secures the buyer’s offer).
- Title Check – Depending on the state where the home is located, a title company, closing attorney, or closing agent will be selected to handle the closing process. Their primary purpose is to get a preliminary title report, which confirms that the seller is the legal owner of record of the property and that the property has no unsettled liens or other claims against it, including all real estate taxes and special assessments. If you haven’t selected a title company, closing attorney, or closing agent yet, your ZipRealty Realtor can assist you in finding a reputable firm.
- Homeowner’s Insurance – It’s your responsibility to obtain homeowner’s insurance. Lenders always require the buyer to have proof of homeowner’s insurance secured before they approve your loan. Insurance policies vary widely, so shop around. ZipRealty’s insurance partners can provide you with a free, no-obligation quote if you choose.
- Disclosures, Inspections, and Contingencies – The seller must disclose any material facts about the property. Disclosure of material facts can include any property defects or any lawsuits regarding claim to ownership on the property. Generally, it’s the obligation of the buyer to arrange any inspections on the property, including general property and pest inspections – your ZipRealty Realtor will work with you to arrange all of the necessary steps. Other contingencies to be aware of include financing, additional inspections, and sale of the buyer’s current home. Once the disclosures and inspections are complete and satisfactory, your ZipRealty Realtor will arrange to have any contingencies removed from the sales contract.
- Appraisal of Property – The lender will arrange for the property to be appraised. The appraiser’s report will describe the physical characteristics of the property and comparable property values will be used to determine the value of the property. There will probably be a thorough interior and exterior inspection.
- Loan Approval – If you live in an escrow state, once all of the necessary steps are completed, and your loan has been approved, your lender will notify the title company that they’ve approved your loan request, and will send the loan documents to the title company so that the documents can be signed at the closing appointment, which can also be called the "sign-off." At this time, the title company will schedule separate closing appointments with the buyer and seller to sign all of the final paperwork, including your mortgage and transferring ownership of the property. If you live in an attorney state, the loan is signed, recorded, transferred, and funded all at the same time.
- Request to Payoff Seller’s Existing Mortgage – The title company, closing attorney, or closing agent will issue an order to the seller’s existing lender requesting a demand for payment in full and all re-conveyance/release documents.
- Cashier’s Check – In preparation for the closing appointment, you’ll need to obtain a cashier’s check or wire transfer for the amount of money due upon closing. To find out the exact amount due, ask your ZipRealty Realtor, who will work with the title company to ensure you have all of the appropriate information. You cannot pay your closing costs with a personal check.
- "Sign-off" and Closing Appointment – The closing appointment usually takes about 1-2 hours and is where you will sign all of the necessary title and loan papers. Depending on your state, the seller will have already signed all the necessary paperwork or will sign them during this appointment.
- Final Steps – Once your “sign-off” is complete, the transaction needs to be recorded by the county and the formal change of possession must take place. Your ZipRealty Realtor will arrange for the transfer of the property keys with the seller’s agent. The “For Sale” sign and property lockbox will also be removed by the seller’s agent. While the home must be in substantially the same condition as when you inspected it, sellers are not required to thoroughly clean the house. So plan to do these jobs before you move in.