Final Steps: Contract to Closing

Once we’ve formulated an offer and it’s accepted by the seller, it’s almost time to start packing. There’s still lots to do before you’ll own and can move into your new home, but we can keep you on top of that process.

Here’s an idea of what must transpire between the time a seller accepts your offer (when the property is officially under contract, or “pending sale”) and move-in day:

Inspections

There are numerous inspections that must take place prior to closing on a property and they vary based on the type of property and its location. A few of the most common include:

Termite inspection (when we call in a certified specialist to check the property for any damages or other signs of wood-infesting insects)
Surveys (which includes a close check of boundaries to ensure that property lines are properly established and adhered to, and that there are no encroachment issues)
Well and septic (which applies primarily to rural properties and ensures that the well provides safe drinking water, and that the septic system is in proper working condition)
Whole-house inspection (when you hire a certified inspector to take a very close look at the home, documenting any aspects that may be damaged or in disrepair, as well as noting those that may require service in the future)
Final walk-through (typically around 24 hours prior to closing, this is when you’ll walk through your new home to ensure that all of the requested repairs have been made and that the home is otherwise in the same condition it was in when you agreed to purchase it)

All of these items are designed to protect you—the new homeowner—from acquiring any issues that could cost you money or, worse yet, make it difficult or impossible to obtain financing. You’ll know exactly what you’re getting, with no surprises.

→ NOTE: While you have to carefully weigh each defect or potential issue that surfaces through an inspection to determine which are worth pursuing for repairs (by the seller and prior to closing on your new home), those instances also provide an opportunity to net a few extra dollars at closing, or to negotiate a lower sales price—especially for those who are handy enough to tackle a few of those repairs on their own after the sale. For instance, in the event that a home inspector finds a few holes in the drywall, which they estimate to cost around $200 to repair, you may choose to ask the seller to credit you that amount at closing, then perform those repairs yourself. On the other hand, you’ll want to be careful not to “knit-pick” a seller and run the risk of souring a deal. I can guide you through this process to ensure the best results possible.

Select a closing agent

Although closing (sometimes referred to as “settlement”) is the last thing to occur in a real estate transaction, more or less everything that happens between the time a seller accepts your offer and the time you move in is in preparation for this event. As such, there will be a steady flow of information, paperwork and other logistics that will need to be handled by whatever attorney (often referred to as a settlement agent) you select to perform your closing. The sooner you designate your closing agent, the better. So the moment we have a deal, you’ll want to start shopping for one right away in order to get the ball rolling and secure a spot on their calendar.

A closing agent is typically an attorney who specializes in coordinating and directing the transference of ownership for real estate. And behind every good closing agent is an outstanding closing coordinator (typically a paralegal or administrative person). This person (the coordinator) will become one of our best and most trusted friends leading up to the final transaction. Do exactly what they ask you to do and get them exactly what they ask you for in a timely manner, and you can expect your closing to happen without an ounce of trouble.

Though you’re free to select any closing agent (maybe you have one you’ve used in the past), you also may choose to consider one we have first-hand experience with.

The Appraisal

Although we’ll calculate an appropriate value for your new home in order to determine how much you should offer, your lender will need to hire a certified appraiser to perform a separate analysis, to ensure that the home is worth at least as much as what you’ll be borrowing. In a nutshell, they don’t want to lend out more than what the property is actually worth and risk losing money in the event that someone defaults on their mortgage, so the bank commissions for its own independent valuation. Chances are, you won’t even know that the appraisal is done, other than seeing a charge show up on your final settlement statement (the document that shows you every itemized charge related to the transaction).

Title search/review

Another item that will occur more or less behind the scenes (but will show up on your settlement statement) includes a title search. At a glance, the concept of a title search may sound alarming, but it’s very routine and basic. This is the process by which a title company determines that an individual (or individuals) has clear ownership of the property they’re offering for sale, as well as examines any restrictions that may be placed on the property affecting its usage. The fact is, 90 percent of homes (or more, I’m sure) are held under mortgage and no previous lender would have lent out that money without first conducting a title search, so rarely—if ever—do issues turn up.

Nonetheless, for the sake of requirement and peace of mind, your closing attorney will commission a title search.

We can go over this in more detail at a later date, but now that you know the basics, you shouldn’t be alarmed when the requirement surfaces. You’ll also need to establish title insurance, which insures the findings of the title search. This is something that your closing agent will go over with you in greater detail closer to the time of the transaction.

Home Warranties

Some sellers choose to package their homes for sale with home warranties in order to “sweeten” the deal for potential buyers, by adding some additional peace of mind. In those cases, the cost for the warranty is built into the price of the home, but it’s important to note that you may opt to add your own warranty in the event that one isn’t already established.

Warranties designed for newly constructed homes (in addition to the warranty that every builder is required by law to offer on their own behalf, typically for one year) provide coverage for such things as: workmanship for one full year, mechanical problems (like plumbing and wiring) for two years and coverage against structural defects for up to 10 years. Warranties for existing homes (those that aren’t new, but previously owned) typically provide a year’s worth of coverage for everything from major appliances (like heating and cooling equipment, but possibly even refrigerators) and mechanical (including electrical and plumbing) to roof leaks. The cost for warranties varies by the depth and length of coverage and can vary from as little as a few hundred dollars to several thousand, depending upon the amount of coverage you choose. Basic warranties, however, typically hover around the several hundred dollars mark.

A final laundry list

There are a few more items that you’ll need to have in place before closing, some of which will be requested by your lender (like a homeowner’s insurance policy, for instance).

Pre-closing checklist: Here’s a checklist for the most common things you’ll want to have in place prior to closing on your new home.

Establishment (or transfer) of electrical services and account (You’ll be pleasantly surprised how easy this is, but you’ll need to contact the electrical company at least a week prior to closing, in order to have service established.)
Cable, phone and/or Internet service (Yeah, we can live with out them for a few days, but just call and check to see if your current providers can move your account to a new location. If those same providers do not service the area of your new home’s location, you’ll have to select a new provider. The best time to tackle this transition is a few weeks prior to closing.)
Change of address and mail forwarding (You don’t want the change and forwarding to take effect prior to move-in, obviously, but a quick trip to the post office and you can have this scheduled in no time. They’ll hold the request until you’re certain that the move is done. And don’t forget to make a list of all your mailing subscriptions, banking and credit card providers—as well as every single account or service you can think of—to notify them of your new address. Forwarding will ensure you get all of the mail sent to your prior address, but you’ll want to establish those changes as soon after closing as possible.)
Last, but not least, if you’re planning to rent a U-Haul and tackle it yourself, get that scheduled well in advance to ensure that there are no issues. If you’re hiring a mover, we’d advise setting that up even farther in advance.

Simple timeline to closing

If you know when you need (or simply want) to be in your new home, then shooting for that target date is easy. By answering a few questions, we can help you determine when it’s appropriate to get started in your search, by what date you’ll want to have secured a contract, and everything to expect thereafter.

Just grab any available calendar (to aid in counting days) and fill in the resulting dates below:

First, whether it’s the start of a school year, your first day on the job, or just personal preference, establish the date by which you’d like to be in your new home and record that here. And we’d advise you to give yourself some wiggle room, so you aren’t left living out of boxes for the first day of school or work.

Though we’ve already provided a total below, this list will give you an idea of where that number comes from. It also gives you the ability to subtract out any items that you may have already checked off the list (like loan application, for instance, if you’ve already gotten that out of the way).

Prequalification: 1 day

The initial search: 1 day

Follow-up searches/new listings (typically): 3 days

Typical time from submission of offer to contract: 2 days

Home inspection process and negotiation of requests or credits: 4 days

Loan approval process/delivery of papers: 45 days

Required inspections: 5 days

Appraisal: 3 days

Search and title preparation: 9 days

Scheduling closing: 5 days

Pre-closing (final) walk through: 1 day

Now, grab your calendar and start counting backwards the total number of days listed above. This is the latest point at which you should begin the process in order to be in your new home by your selected date.

→ NOTE: It’s important to remember that this timeline applies only to the purchase of your new home and does not include the sale of an existing property.

And though they typically take no time at all, here are a few items we’ll need to add to your timeline: