So you’re new to investing in real estate, huh?
You may be wondering how your first close will go.
Is it an easy and seamless process that makes real estate so enticing in the first place?
Will it be an incredibly stressful process?
Here is all you need to know about closing and what you can expect during your experience.
First Off, What Is Closing?
Closing is the final and fulfilled agreement in the sales contract between the buyer and the seller. When you close, you can expect a transfer of documents and money so that you can give ownership to the buyer.
What Are Some Things That You Might Expect?
You will first have to pay off all of the loans that you still have with the home. In terms of those third-party services that assisted with the process, you must pay them off as well. Many other things are dependent on your specific situation.
If you made an agreement to make repairs on the home, or if you have any impending actions that you must take to make the house legally livable, you must complete those things as well. You can, however, create a contract to deal with these things at a later date, though that is a completely separate article.
Where Will You Close?
You will typically close your sale in the office of the title insurance company, or the escrowee. Other times, you may end up closing at an escrow company or at the lending office. If you’re working with an up-to-date title company, they may even send a mobile escrowee to make the process a bit more convenient.
Even though some attorneys will offer up their offices to seal the deal, there have been newly implemented trust accounting restrictions that make it difficult to release the funds right away. Essentially, you may need an escrow company to transfer regardless.
You can also expect to be part of a “witness-only” closing. The buyer and seller will select a location for the closing wherein the documents will be disbursed. Note that witness-only closing is not legal in every state.
Do You Need To Attend The Closing?
Not necessarily. In some cases, you should be able to sign the deed ahead of time and transfer the necessary documents. This is especially true in a conventional escrow closing. You can pass along power of attorney as well, so that your person can work with the escrowee.
Note that there are both pros and cons of not going to the closing. One pro is that you won’t have to speak directly to the buyer about small problems with the home or possible closing credits that you did not speak about ahead of time. The disadvantage is that you won’t be apart of the whole process to realize any mistakes that may extend the closing time.
Your closing will be completed when your lender, lien holders, and service providers, have been paid off by your escrow. You will no longer be the owner of that home or property! In this case, you provide the buyer with all different home keys, as well as any particular devices for the home’s appliances.
Congrats, you have just closed for the first time! If you can, come back and let us know your experience so that you can help other first timers just like yourself!