The Real Estate Transaction
The process of purchasing or selling property can be very confusing and complicated whether you are a first-time purchaser or even if have been through it several times before. Obviously, every transaction is unique so the information below is simply meant to be an outline of the major points of a residential real estate transaction.
contract
The first stage of a real estate transaction occurs when the seller and purchaser enter into a contract on the property. The contract contains all of the details surrounding the transaction as well as listing all of the relevant parties. If you would like us to represent you in a transaction, this is the time when our name would be entered as your attorney. If you are unsure about how to accomplish this, ask your realtor or contact us prior to the execution of the contract.
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Attorney Review/Inspection Period
Once the contract has been signed by both parties, the purchaser and seller then have five business days to have their respective attorneys review the contract. During this time, the attorneys can agree on modifications to the contract, with the exception of purchase price, and either party has the right to terminate the contract without penalty. During this period, the buyer also has a right to order an inspection and raise any issues that he/she would like the seller to repair or provide a credit at closing.
title
Once the parties agree on any potential modifications and the inspection is completed, the seller’s attorney will order a title commitment and perform a search on both the seller and the property. This is done to ensure that the seller is the proper party to be conveying the property, no encumbrances or liens exist on the house, and title can be transferred accordingly. This report is then provided to the purchaser’s attorney for review.
appraisal/survey
The seller is also responsible for ordering a survey and providing one to the seller upon closing. If the buyer is obtaining a mortgage to purchase the property, an appraisal will also likely be order to determine the value of the house.
financing
Prior to preparing for closing, the buyer must obtain firm financing from their lender to ensure the transaction will be funded at closing. Generally, there is a contingency clause that states if the purchaser cannot obtain reasonable financing, then the contract is terminated without penalty to either party.
pre-closing
Once all of the above are completed, both attorneys will prepare for closing. This includes the drafting and review of all closing documents, the seller obtaining payoff letters if applicable, all utilities and other bills must be paid by the seller, and at that point, the closing can be scheduled.
Closing
The closing typically occurs at the closing office of the title company located closest to the subject property or at the seller’s attorney’s office. The closing can take anywhere from 45 minutes to a couple hours. All mortgage and supplemental documentation is executed at the closing table, and once the transaction is funded by the purchaser or the lender, the buyer then takes possession of the property. Seller are usually not required to attend the closing because all of their documents can be signed prior to closing.
More information
Again, this is a rough outline of the major points of a real estate transaction. Many of these tasks are completed simultaneously in order to expedite the process, and cash purchases almost always can close faster due to no lenders being involved.
For a more detailed explanation of any of these points, please contact one of our experienced real estate attorneys who would be happy to offer you a free, no- obligation consultation. Call us today at (630) 277-9890.