clos·ing (‘klO-zi[ng]), noun, the name of the final meeting between a buyer and seller in which a real estate sale transaction is consummated, when title is transferred, money is exchanged, and when the necessary papers are signed and delivered; a meeting where real property is conveyed. A real estate closing entails much more than a meeting between a buyer and seller. The actual meeting is oftentimes the only time that a buyer and seller are together, in some circumstances, the parties may never meet at all. Much has to happen before a closing can take place. The following are some guidelines to remember before purchasing a home:
The first thing you need to do is figure out what kind of home you would like to buy and how much you can afford to pay. Remember that your calculations will only be an estimate of your actual cost. Until you have selected the loan type and terms, you can only use this estimate to help determine the price range of homes you want to preview.
In order to know that you won’t have a problem with obtaining financing, it is best to find out for certain the size of mortgage for which you can qualify. You can either go to a mortgage broker or directly to a lender to find out what your options are. The pre-approval letter the lender issues you also may help you be taken more seriously by agents and sellers because they will recognize you as someone who is prepared to buy.
Using an agent can help you in numerous ways, and remember that both the seller’s agent and the buyer’s agent are paid out of the seller’s proceeds which are usually taken into consideration in the marketing price of the home.
You can enter into a buyer’s representation agreement with the agent. This agreement means that you will have one agent representing you as a buyer. The agreement empowers the agent to not only search the latest Multiple Listing Service list, but to seek alternative means of finding you a home, including searching foreclosures and homes for sale by owner. With a signed agreement, the agent becomes a fiduciary and must act, by law, in your best interests.
When you have found the home you want, you will write a contract, usually through your agent or your attorney. Your offer should specify, among other things, the purchase price, which items and fixtures are to remain and are part of the purchase price, the date of closing, and when you will take possession. Your contract also should set forth some contingencies, such as getting a home inspection and evaluating and approving its results. If your inspection reveals major problems, you and the seller can renegotiate the contract, insofar as what the seller is willing to pay for repairs, and if he refuses and you are no longer interested in buying, then you can withdraw your offer without any repercussions and you are entitled to return of earnest money. Other contingencies may include, your ability to obtain favorable financing and/or the house appraising for the contract sales price.
As soon as you and the seller have executed the contract of sale, you must apply for financing. If you have been pre-approved, much of the work has already been done and your loan will process more quickly. You will need to decide what type of loan you are interested in obtaining, the term of the mortgage, (ie: 15 yr , 30 yr); and whether you are interested in a fixed or an adjustable interest rate. Discuss all of these options with your lender or mortgage broker. Loan officers are very knowledgeable and can guide you through these options.
In South Carolina, attorneys must handle closings of real estate. We live in an attorney preference state wherein you, as buyer, have a right to choose your own attorney. An attorney will ensure that the property is properly conveyed and is free and clear of any title defects You need to find an attorney whose practice is concentrated in the area of real estate. These attorneys are more familiar with the possible pitfalls that may arise and, hopefully, can remedy them as quickly as possible. The attorney also will work closely with the lender and real estate agent to protect your rights in this sometimes complex transaction.
Many sales contracts require that you have a Aclear@ termite letter and heating and air letter in order to close the transaction. This is more protection for the buyer and can reveal some unpleasant surprises, such as your inspector may find a major problem with the furnace or the foundation. These are problems that must be fixed or the home cannot be conveyed. The seller generally has to arrange to pay for the repairs, or have the repairs paid for out of his proceeds.
Until closing, and even during the closing, be prepared for anything to happen. Possible pitfalls may include your closing costs being higher than you thought because some additional fees have been added; problems with your credit report that delays the closing; a problem the seller was supposed to fix was not repaired in time; or the appraisal may come in the day before closing and be short of the asking price of the home. If any of these things or problems arise, hopefully you have retained a knowledgeable attorney and real estate agent to guide you through these pitfalls. Remember, prepare for the worst and expect the best. It is a wonderful feeling to be a homeowner.