The closing is the final step of the home buying and selling process. Many sellers or Realtors® will refer to closing as the finish line in the overall process, but that doesn’t provide a lot of detail about what goes on – or what a buyer needs to do to prepare.
Just because you’re done with most of the work doesn’t mean the closing isn’t important. Let’s look at what happens at closing for both the buyer and seller so you can be prepared for the process.
What Happens at Closing?
During the closing process, the final documents are signed to pass the home from the buyer to the seller. A lot goes into the preparations for a closing. The home needs to be inspected, and the mortgage needs to be approved, and certain contingencies in the offer need to be met. However, when everything comes together, the buyer, seller, Realtors®, and title representatives come together at the closing to exchange ownership of the house. The agreements signed at closing are between the buyer and seller, but also between the buyer and the lender. If you are selling your home, then you only need to worry about the first part – as long as your buyer has their finances in order. Once the documents are signed, the closing costs and escrow items are paid, settling the various fees and costs associated with the buying process. Both the buyer and the seller have documents to sign and fees to pay during closing, but the burden tends to fall more on the buyer at this time. Recommended Reading: How to Buy a House: 8 Steps to Find Your Dream HomeWhat Are Closing Costs?
Closing costs refer to the minor expenses and fees that come with buying a house or property. On their own, these fees aren’t that much. You might only spend about $100 here or there for various application fees or HOA transfers. However, these fees collectively add up. The rule of thumb is that home buyers can expect to pay between 2-5% of the total cost of the home during closing. For more information on closing costs, check out our post Understanding Closing Costs: What's Included & What to Expect. It reviews all closing costs and shows how you can calculate them. This will give you an idea for what to expect during the overall process.What Could Delay Your Closing?
The closing process is meant to be the finishing touches on the buying or selling process. The closing can’t move forward unless every other element of the real estate transaction is taken care of. That being said, this does mean that home closing are frequently delayed – sometimes for a few days, other times for a few weeks. There are a few common causes of closing delays:- Problems with the home inspection make the buyer reconsider their offer or adjust their contingencies.
- Loan problems can affect whether or not a buyer can afford the house.
- A lower appraisal than expected could reopen negotiations.
- Buyer contingencies could prevent both parties from closing the deal.
