By Robert Irwin
In real estate, closing the deal has two meanings. The first is actually getting a buyer to sign on the dotted line. The second is closing the transaction, and getting title to change hands. Let's see how that is accomplished.
You're selling "by owner" and have found a purchaser ready, willing, and able to buy your home. You go to a real estate agent or attorney who draws up a sales agreement and everyone signs off. Now what?
There are 5 more steps that a "by owner" seller must go through in order to close the deal. Since there's no agent involved, it's up to you to do these.
Follow the buyer's progress in securing financing
Deal with disclosures and inspections
Sign the deed and close escrow
It's not necessary to follow these in exact order, although the first obvious thing to do is to open the escrow. This starts the process of searching the title to be sure there isn't a hidden lien somewhere. (A lien is typically a loan or other debt that encumbers or prevents the title from being cleared--these rarely turn up, but when they do, it's up to you to go back to the lender and get them cleared.) Escrow can be opened simply by bringing the sales agreement to an escrow officer.
You'll also want to keep track (by phone calls) of the buyer's progress in getting financing. Presumably the buyer gave you a pre-approval letter showing that financing was available. Now, the buyer has to perform, and get the lender to make the loan. Any hitch or breakdown along the way means that the buyer might not be able to get the mortgage necessary to make the purchase, and that could break the deal. If the deal can't be made, you'll want to find out as quickly as possible and get the house back on the market.
Of course, you'll need to disclose to the buyer (as required by your state or the purchase contract) defects in your property, and deal with the buyer's professional inspection as well as a termite and pest inspection (and other reports that may be required). If serious problems turn up, you might have to make repairs, or even renegotiate the price or terms of the deal.
It may sound like a lot to do, and in some transactions it can be, but it usually goes fast. A typical closing today lasts only about three or four weeks. (The reason is that lenders can quickly make decisions and fund loans electronically.)
Soon the escrow company will call and say they are ready to close the deal. The down payment and closing costs from the buyer are in escrow and the lender is ready to fund. All that remains is for you to sign the deed. You go down to escrow, see your closing statements and learn the actual amount of money you'll get out of the sale, then sign the deed. A few days later escrow closes and you get your check.
Don't get so involved in closing the deal that you forget to make plans for your own move. If you're buying another home, its closing should be tied to that of your old house so they close simultaneously. You'll need to arrange for utility turn- offs and -ons as well as movers. Moving is the other side of closing!
Robert Irwin is the most prolific real estate writer in America having produced over 100 published books in the field. His TIPS & TRAPS McGraw-Hill series has sold well over a million copies and his FOR SALE BY OWNER KIT and FIND IT, BUY IT, FIX IT and other books have been strong sellers for Dearborn. In addition Irwin writes a regular real estate column for The Wall Street Journal online and is introducing a new weekly column forOwners.com.
Irwin has sold his own property "by owner" and during over 30 years in the business has been a broker and consultant to lenders, agents, buyers and sellers.