Navigating a residential real estate closing can seem complex, but understanding the key steps helps ensure a smooth transaction. The closing process is the final stage where ownership transfers from seller to buyer, involving legal, financial, and administrative tasks.
1. Open an Escrow Account
Once the buyer and seller agree on terms, an escrow account is opened by a neutral third party to hold the buyer’s deposit and other funds securely until closing. This protects both parties during the transaction.
2. Conduct Title Search and Obtain Title Insurance
A title search verifies that the property’s title is clear of liens, unpaid taxes, or other encumbrances. Title insurance protects the buyer and lender against future claims or disputes over ownership
3. Complete Home and Pest Inspections
The buyer arranges a home inspection to identify any structural or maintenance issues. A pest inspection is often required to check for infestations. Based on inspection results, buyers and sellers may negotiate repairs or price adjustments.
4. Secure Financing and Finalize Mortgage Approval
Buyers work with their lender to complete mortgage approval, submitting required documents and fulfilling loan conditions. The lender may order an appraisal to confirm the property’s value aligns with the loan amount.
5. Review and Negotiate Closing Costs
Both parties review closing costs, which include fees for inspections, attorney services, title insurance, and lender charges. Negotiations may occur to determine who pays which costs.
6. Obtain Necessary Approvals
If applicable, buyers may need approvals from homeowner associations or local government, especially if the property is part of a condo or requires zoning permissions.
7. Conduct Final Walk-Through
Shortly before closing, the buyer performs a final walk-through to ensure the property’s condition matches the agreement and any requested repairs are completed. This usually occurs a day or two before closing.
8. Closing Day: Sign Documents and Transfer Ownership
On closing day, buyers, sellers, attorneys, and agents meet to sign all necessary documents, including the deed and mortgage papers. The buyer pays the remaining balance, often via cashier’s check or wire transfer. The seller then hands over the keys, and ownership officially transfer.
9. Post-Closing Responsibilities
After closing, the buyer files the deed with the local county office to record ownership officially. Utilities must be transferred into the buyer’s name, and many new owners change locks for security
