Buying or selling a home is a big endeavor, but it doesn’t have to be confusing. We have put together a roadmap to keep you on the right path. Follow along during your real estate transaction to ensure you understand the process and know what to expect every step of the way.
- Listing Agreement
Initiating a listing agreement is the first step in a real estate transaction. This document is issued by the selling party, outlining the sales price of the home, the allotted commission rates for all involved real estate agents, and the length of time the property will remain on the market. At this time, sellers are required by federal law to disclose certain information about the home. This may include the presence of lead paint in the home, known sex offenders in the neighborhood, and any personal relationships that exist between the sellers and the listing real estate agent.
- Purchase Offer
In the second step, it is the buyer’s turn to initiate a formal document. The buyer will present a purchase offer that the seller has a chance to accept or counter. When both parties reach an agreement on all terms, including the final sale price of the home and length of time allowed to close the sale, the official sales contract is signed.
With the sales contract now signed by both the buyer and seller, the third step of a real estate transaction is to open escrow. Escrow refers to a neutral party that holds all funds and contracts until all conditions of the sale have been met. The sales agreement determines when the funds can be released from escrow, which is typically 30-60 days. A title search is often completed in this step to confirm that the current owner can legally sell this home.
At this phase, an inspection should be conducted by a licensed professional. This is generally completed at the buyer’s expense. If the home inspection report differs from the information that the seller has disclosed about the home, the buyer may renegotiate or cancel the transaction. The inspector may look for things such as roof quality, electric work, insect infestation, and otherwise ensure that the home is up to modern code.
Next, the buyer is evaluated for a mortgage. The buyer must obtain this loan within the timeline outlined in the sales agreement. The two main factors of mortgage approval are the credit standing of the buyer and the value of the home.
At closing, the legal title of the home is transferred to the new owner. Both the buyer and seller will receive final closing documents, which includes the title paperwork and loan paperwork. Keys to the home will formally change hands at this time, which marks the end of the real estate transaction.
TIP: It is also beneficial to complete a final walkthrough of the property about a week before closing to ensure that nothing has changed or come to light following the initial inspection.
Still have questions? Talk to Hailey Munns or one of our experienced real estate attorneys at 1-401-234-2109 today.