Navigating a real estate transaction can be a stressful and time-consuming experience. You have to stay in touch with a number of different parties, monitor the process and complete a significant amount of paperwork. Whether you're a buyer or seller, there are a few steps that you should be prepared for when completing a real estate transaction.
Negotiate and Sign Purchase Agreement
The buyer and seller of the property must negotiate with each other, sometimes through real estate agents, to determine a final selling price and terms for the transaction. The buyer usually makes the first offer, which the seller can accept, reject or submit a counteroffer. Once both parties come to an agreement, they must sign a contract for the sale of the property, contingent on an inspection and other details outlined by both parties. The buyer often has to provide earnest money to confirm the intent to purchase the home.
Inspection and Appraisal
The buyer has the option to arrange a home inspection after the sales agreement is signed (sometimes before). The property must be habitable and up to code. The buyer or lender confirms the value of the home by hiring a licensed appraiser. The results of the inspection and appraisal are used to confirm the sales contract, which is why the initial agreement is commonly contingent on these two professional review services.
If the buyer of the property is planning to use financing to purchase the real estate, both parties must wait as the lender processes the necessary paperwork to close the loan. The lender orders a title search and asks the buyer to purchase homeowner's hazard insurance. The buyer stays in close contact with the lender to ensure that the bank has all required information and documents. When finished, the lender and real estate agents confirm a closing date.
At closing (also called the settlement date), the sale is finalized and the transfer of ownership takes place. The buyer signs paperwork and provides the down payment and closing costs in the form of an official cashier's check. The lender or escrow company distributes payment due to the seller and agents to close the deal. The final step of the process is for the seller to hand over the keys to the new owner.
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