How to Close A Real Estate Sale
What Does "Closing" Mean?
The close or settlement is when you sign the final ownership and insurance paperwork and get the home’s keys.
The closing process technically begins when you have signed a purchase and sale agreement. That agreement should specify a closing date. Typically — from the signing date to the closing date — closing takes four to six weeks. During this time, purchasing funds are held in escrow, where your money is safe until the deal is officially done.
When Will the Final Walk-Through Happen?
Most real estate sale contracts allow the buyer to walk through the home within 24 hours of settlement to check the property’s condition. During this final inspection, which usually takes about an hour, you and your agent will make sure any repair work that the seller agreed to make has been completed.
During the walk-through, you’ll also double-check that everything in the house is in good working order. Be sure to:
Run water in all the faucets and check for leaks under sinks.Test appliances.Check the garage door opener.Flush toilets.Open and close all doors.Run the garbage disposal and exhaust fans.
If the home is in good shape — woo-hoo! Your next stop is the closing table.
If anything is amiss, your agent will contact the listing agent and, in most cases, negotiate to get the seller to compensate you at closing — typically in the form of a personal check — for the costs of fixing the problems yourself.
Worst-case scenario: You have to delay closing to resolve problems. In the unlikely event that happens, your agent will help you address the issue.
Who’s Invited to The Closing?
Certain people will be there. Who, exactly, depends on your state. Typically, you will be joined by:
Your agentThe sellerThe seller’s agentA title company representativeYour loan officerAny real estate attorneys involved in the transaction
The closing usually takes place at the title company, attorney’s office, or the buyer’s or seller’s agent’s real estate office. FYI: Some states, like California, don’t require an in-person, sit-down closing because they’ve enacted legislation that allows for electronic closings with remote notaries.
Nonetheless, as the home buyer, you’ll have to sign what might seem like a mountain of paperwork — including the deed of trust, promissory note (promising the lender you’ll pay back the loan), and other documents. That cramp in your wrist will be worth it once everything is done.
How Much Will I Pay for Closing Costs?
If you’ve heard people vent frustration with the process of buying a home, then you’ve likely heard complaints about unexpected costs at closing. Let’s unpack what you should expect so you’re not surprised, too.
Closing costs can vary widely by location and your home’s purchase price. Costs are split between you and the seller, but as the buyer you’ll cover the lion’s share. You can generally expect your closing costs to be 3% to 4% of the home’s sales price. So, on a $300,000 home, you can pay anywhere from $9,000 to $12,000 in closing costs. (Meanwhile, the seller typically pays closing costs of 1% to 3% of the sales price.)
You can try to predict closing costs with calculators like Nerdwallet’s, which lets you plug in your mortgage details to get a rough estimate of what your costs will be.
Closing fees often include (but are not limited to):
Commission for the buyer’s agent and seller’s agentA loan application feeAn origination fee, which lenders charge for processing your loanThe appraisal feeA fee for pulling your credit reportAn underwriting fee, which covers the lender’s costs of researching whether to approve you for the loanA title search feeProperty taxes, which are due within 60 days of the purchaseA recording fee for filing a public land record with the courthouse
These fees are a bummer. The bright side: Almost all of them are one-time deals.