Some Of The Steps Needed To Get To The Closing Table

Some Of The Steps Needed To Get To The Closing Table

I get this question a lot: What is the process for buying a house?


Below you will find the steps a buyer can expect to encounter when purchasing a home. This table below by no means is a one for all. Steps will likely be added, delete, shortened or extended. Every transaction presents a new challenge or obstacle. These challenges can be big and/or small. Each step will have an impact on closing... whether it be big or small. So all I can say is "Are you ready?"


Steps

Title

Explanation (If needed)

1

Get Pre-Approved

You do not have to go with the first company you get pre-approved with. I always tell people if they are not happy with a lender they find or one I recommend they should feel free to get another pre-approval from another lender. Send them an email and/or reach out to their boss to explain.

Tip: Start a drop box (or something similar) file where you can put all your documents (ex. Bank Statements, ID’s, W-2 and so forth).

2

Find Real Estate Agent

Again find an agent you want to partner up with…like ME!! =) And again if you are not happy find another agent. But remember to send the original agent an email letting them go and reach out to the agent’s broker. My broker is Phil Faranda 914-450-8883 and jphilip@jphilip.com

Also be prepared to answer questions related to your real estate goals.

3

Tell Your Real Estate Agent What Your Real Estate Goals Are (over the phone or in person) and Share Your Pre-Approval Or Proof Of Funds

Yes you will need to share your pre-approval and/or proof of funds.

4

Begin Receiving Properties To Consider and Simultaneously Share Properties You Find With Your Agent. Let Your Agent Do The Leg Work

This will happen throughout your house hunting search

5

Your Agent Will Confirm Property Status As What You See on The Internet And MLS May Not Be Accurate. All Property Status’ Must Be Confirmed

This will happen throughout your house hunting search

6

Book Appointments At Least 24 Hours In Advance

This will happen throughout your house hunting search

7

Meet Agent At The Home(s)

This will happen throughout your house hunting search

Plan on average 20 minutes for each visit.

8

WOW!! You Like a Home!! Place An Offer with Proof of Funds or Pre-approval---Take into consideration all that you can see in the offer (i.e. condition of roof, updates present or not present).

Be prepared for anything (i.e. multiple bids, accepted offer already on the table, seller changing their mind)

9

The Waiting Game

It would be great if the selling side would respond quickly…but that is not always the case. Something it can take a few days. 

10

Negotiations Begin

It would be great if the selling side would accept your offer right away and not negotiate, but that is not always the case. Something it can take a few days. 

11

Accepted Offer!! Yippie!!

Immediately upon hearing you have an accepted offer your home inspection must be scheduled quickly thereafter.

12

Inspection

The inspection needs to be quickly scheduled.

The purpose of the inspection is not to use the report as a tool to reduce the purchase price.

13

Review Inspection Report (You should receive it in 24 hours)

No home is perfect. Even brand new homes have issues.  The inspector will find an array of things ranging from safety concerns to items they believe need replacing. The report is not to be used as a renegotiating tool. It is more for peace of mind. But there are certain things that can be negotiated: structural issues, leaks in the roof, mold, lead, asbestos and so forth. But remember just because you ask for something does not mean the seller will do anything…even if it is a MAJOR concern. 

14

Attorney Info Is Exchanged Via Memo

  • This should be done ASAP after both parties have an agreement to move forward. Done after the inspection. Attorneys step in to draft what is agreed upon but they still may tweek a thing or two.

If and once the buyer and seller have agreed on moving forward, then the buyer’s agent must share info on buyer and their terms in order for the seller’s agent to prepare the memo. Once this memo is in hand the attorneys will get a copy and the contract drafting will begin.

An offer and the memo are non-binding.

15

Attorneys and the Contract

The first person to get started on drafting the contract is the seller’s attorney.  Then he will pass it to the buyer’s attorney will will review the verbiage the seller’s attorney has for the seller and then the buyer’s attorney will add protection and representation for the buyer. Once that is done the buyer’s attorney will send the contract back to the seller’s attorney for approval.

16

Contract Signing (Down payment is due at this time)

Once the attorneys have an acceptable contract then the buyers will sign the contract (in person or electrically). If signing electronically the attorney should go over the contract over the phone. Once the buyers have signed and provided their down payment then the sellers will be called upon to sign as well. Once both parties have signed then the contract is fully executed and the status of the property will change from active to in contract or pending.

The property is up for grabs until the contract is fully executed. The seller is not obligated to refund the seller for their inspection if they decide to go with another buyer. In other words, another buyer can swoop in and take the property from you until contracts signed.

17

Contracts Are Fully Executed

  • The goal should be to be in contract in 1 week. But often times it take 1.5-2 weeks. Sometimes longer. And just because the buyer signs and pays their down payment the contract is not fully executed. A deal is not done until the seller signs.

With fully executed contract at hand the lender (if there is one involved) will need a copy to get the ball running on the approval/application process.

Other things that will follow shortly are:  scheduling the appraisal, beginning the title search.  After contracts are signed things will slow down a little bit with updates because of the title search being performed.

Quick note: If after all is said and done and the buyer ends up finding themselves NOT in contract but out of pocket for the inspections they did the seller is in no obligation to pay the buyer back.

18

Title Work

  • This can be fast (1-2 weeks), if there are no issues and if the title company is not running behind. But it can also take a while depending on cue and if issues were discovered. This could add weeks to the process.

This could take 2-4 weeks to complete. And if there are issues it could delay things quite a bit. Issues could involve open permits, violations, finding liens and so forth. Issues typically must be resolved prior to closing. If there are issues and the seller will not address then the transaction could fall apart if the buyer has no means or desire to remedy on their own. Some times a conversation with a lender can bring light to some options. So ask your lender for options…if you have any. For instance, a rehab loan could provide the means to close…but you will have to qualify and get pre-approved for this too. And the process with such a loan is quite a bit different. Speak to you lender if needed.

19

Ordering the Appraisal

  • Expect a week before  you find out what value the lender provides the home.

Some mortgage companies will order this at the beginning and others will order late in the game. The buyer and seller aren’t typically present. Just one of the agents, typically the buyer’s agent.

The appraisal report is very important. It will let the buyer (the owner of the appraisal) know what value the home is. Often times, the value comes back at asking. In the event that it come back higher the buyer is in luck. If it comes back lower then renegotiations MUST occur and one of the following will occur:

  1. The transaction dies: This happens if the seller insists on the purchase price previously agreed upon. But the buyer insists on the price mentioned on the appraisal.

  2. The seller agrees to reduce the price: The seller realizes the value is not as high as the agreed upon purchase price and agrees to the lower price.

  3. Split: The seller and the buyer work out a split agreement to keep the deal from falling apart.

  4. Buyer Pays The Difference: If the seller says no to reducing the purchase price and the buyer really wants the house the buyer agrees to pay the difference.

There are probably other ways this can play out but those are a few. Speak to your attorney to find out what he recommends as this is not legal advice.

20

Mortgage Commitment

  • There is a conditional commitment and a commitment free of conditions.

  • From receiving a commitment clear of condition the closing should be in 2-3 about two weeks, but title has to be in order too, plus many have to figure out their schedule.

  • Some lenders can move faster.

The commitment is simply what the mortgage provides to the buyer. This is what the mortgage company provides to show the buyer is getting the money. The first commitment provided will likely have conditions that must be met. These conditions may be as simple as provide a copy of your driver’s license, clearing a title issue or resubmitting financial documents.

21

Clear to Close

  • From clear to close to closing it can will be about 2 weeks. But if there are title issues it could take longer.

  • Some lenders can move faster.

Once the mortgage company has a commitment that is free and clear of conditions they will issue a clear to close.

Exceptions may occur. This is not meant to be mortgage advice. Please confirm what process you can expect to get your clear to close.

22.

Scheduling The Closing

  • There are a lot of people that need to coordinate. Real estate agents don’t always attend the closing.

Once your closing is scheduled the day before or day of closing your agent and yourself will have to do a walk through. The purpose of the walk through is to make sure the home is in tact. It is not an inspection. It should not last more than a few minutes. It’s a walk though. You simply walk through the house and make sure things are as expected. If the seller was to do work to the home prior to the closing the buyer should look it over. Make sure it is done. If it is not the closing could be delayed or money collected at closing in escrow.

Again not legal advice. Please discuss with your attorney if there are issue. Your real estate agent can inform the seller’s side. If an agreement is made or not made your attorney needs to know to know how involved he needs to be and to know if money is to be collected or a reduction in price.

23.

Closing (Bring Your Check Book)

  • Typically occurs in 45-60 days.

  • Rehab loans have extra steps and will take longer

  • Short sales and foreclosures can also take a while to close.

  • Cash transactions can be a lot faster as most steps her don’t occur.

Plan for 45-2 hours to be at the closing table. You may be able to do the closing electronically. You should also ask to receive your closing documents early to review. They may not produce everything to you prior but review what you can.

The money to be collected at closing is not disclosed until right before closing. Plan on taking the day off. It is not unheard of to get the final numbers moments before closing or at closing. Be sure to bring your check book.

If all goes well, you get the keys and the home is yours.

Unfortunately, there are cases where people are at closing and it has to be postponed. Hopefully that will not happen to you.

And depending on how long it take you to close, if you are seeking a mortgage you should be prepared to received requests for extensions from both your attorney and your lender. Please discuss this early on as this happens quite a bit.


Lorei Velazco Headshot
Author:
Phone: 914-380-9495
Dated: January 17th 2017
Views: 6,352
About Lorei: Lorei Velazco was born and raised in the south. In fact, Lorei earned two bachelor degrees (Communic...

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