The real estate closing can actually mean several things to many different people and it's usually a different date depending on the state. When a seller accepts a buyer's offer, escrow is opened. This starts the buying process. As soon as your agent deposits your earnest money with either the escrow company, title company, or brokerage, you have opened escrow and the process begins. And escrow company will only do what they are told so in the purchase and sale contract are instructions as to how escrow is to carry out those instructions. This means they are to order a title search, facilitate the transaction between lender, buyer, seller, and all the agents, and disperse funds at the end of the transaction. Here are some things to understand about opening escrow and the closing process.
#1. Escrow can stay open as long as you need as long as it is written in.
Contracts will have termination dates. Things must be done in a timely manner. There's usually a closing date written in on the purchase and sale contract. This will be the date that everything finalizes and the escrow company is no longer needed. Everyone has done their jobs and the deal is then done. However, if you need to extend escrow, this needs to be in writing and clearly defined for both the buyer and the seller and initialed or signed off on.
#2. Closing problems can cause delays.
Appraisal problems, financing issues, home inspection problems, a feasibility on the neighborhood, an error in the walk-through or even missing documents can all delay closing. Everything needs to work together in order to close on time. Typically, unless there is a set time-frame for some reason, once all the documents are pulled together closing can really happen at any time. If buyer and seller are ready, all contingencies are met, any addendums are satisfied and anything else on the instruction less has been completed, buyers and sellers can close at any time.
3. Sellers will usually sign first.
When you close on a real estate transaction you'll need to bring your identification and any outstanding documents or paperwork for the title company or mortgage loan officer if you've been told to. You may need to bring a certified or cashier's check made payable to the title or closing company for any closing costs not deducted from the sale and your down payment. Your escrow company will tell you everything you need to bring to closing so that you're not ill-prepared. The sellers will be called in first and sign all of the legal documents and then they will leave and the buyer will come in afterwards & any additional paperwork.
#4. Closing doesn't necessarily mean you get the keys that day.
Here's where it's a little bit tricky. Closing in different states can mean different things. In some states as soon as you sign the paperwork the deal is closed and you can get the keys right away. In other states, you'll need to wait three days or until documents are filed with the local County. The sellers have transferred the property and now it is up to the escrow company to finalize and disperse all the funds and file all the documents. This could take up to two or three days. Additionally, if the seller has requested a move out time after signing, the buyers will need to adhere to those rules. This could mean up to three days or even longer for the seller to move out and before the buyer can move in.
One of the biggest mistakes many agents make is giving their buyers the keys before it is closed. Although it is rare, there are some instances of things happening between everyone signing and the final documents being dispersed. Perhaps there was a missing document, financing fell through at the last minute, or literally 1000 other things could go wrong even though it is uncommon. However, if a buyers agent gives their buyer the keys before escrow has given the okay, there could be serious fines involved. Do not asked for the keys until your agent is required to give them to you. You've been patient this long, what's a couple more days? I know that you are excited about moving into your home but you don't want to do anything that could disrupt the natural flow of the process.
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Now that you know how closing goes, it's important to talk to your agent on what to expect in your closing. Like I said before, everything is different in each state and with each title company so it helps to understand the process that you'll be going through so that there are no surprises and you feel confident about your purchase.