Whether you’ve purchase a home before or you’re considering it for the first time, it’s likely you’ve heard about ‘closing’ which can be a mysterious process. Closing is all the events that take place from the time you pick a home and tell your agent to make an offer to when you finally get the keys. The following are the steps that are included and will hopefully make the process a bit more transparent:
- Making the offer – The first thing you’ll have to do is make an offer to the seller. You’ll want to move fast in case any other buyers are eyeing the same property. When making an offer, it’s typically recommended that you go no lower than 8 to 10 percent below the seller’s asking price. This will allow you some room to negotiate – but make sure that this amount is not the highest price that you can afford.
- Providing the deposit – The deposit is a sign of good faith as well as commitment that you will need to make to the seller. Usually, it’s one percent of the purchase price for the home and will be included in the offer to purchase. The seller’s lawyer or the real estate agent will hold the deposit until the sale closes. If the seller does not accept your offer, your deposit will be returned. However, if the seller accepts your offer and you back out, you will likely lose the deposit.
- Contract requirements – A number of requirements that will most likely be specified in the contract must be met before you close. These requirements usually include an acceptable inspection of the house and proof that the buyer has secured financing. An inspection contingency usually covers a 10 to 14 day period from the contract’s acceptance while financing contingencies cover a 30 day period.
- The home inspection – A professional inspector will need to do an examination of the property in order to assess the condition of the structure and mechanical features. This is to make sure that any potential issues that you may not have been aware of are found before you make the purchase.
- The contract – The contract is the legally binding obligation between buyer and the seller concerning the purchase of the property that outlines the selling price, closing date, description of the property, the date of possession, and any contingencies that are applicable.
- The closing statement – The closing statement is the document that accounts for all of the financial aspects concerning the sale and purchase of the house. It includes the list of funds paid at closing, real estate commissions, and initial escrow accounts. Copies of the closing statement, also known as a settlement sheet, are required for both seller and buyer.
- The closing documents – These documents include a title search to ensure the title of the property is clear, the title insurance, and an application for homeowner’s insurance, which is usually necessary in order to secure a mortgage.
- The closing costs – The closing costs tend to vary but usually include an appraisal fee, a loan origination fee, a lender’s inspection fee, the credit report cost, a mortgage broker fee, the cost of the title insurance, the document preparation fee, and taxes.
- The settlement – The settlement is the description of the payment of the purchase price’s balance that you owe on the property in addition to the transfer of the property’s title.
Once you’ve found a home that you want to buy, you must complete these steps in order to close the home, but don’t worry, your real estate agent will be on hand to assist with the process.
If you’re ready to start your home search, feel free to contact the team at Park Avenue Properties of Colorado Springs to discuss what you are looking for, or start searching for your next home in Colorado