Part 4: From Offer to Closing
Selling a home can be a thrilling but complex process especially when navigating the home closing process. You’ve already taken the crucial steps of preparing your home for sale, marketing it effectively, and attracting potential buyers. Now, as you begin to receive offers, it’s time to navigate the offer and negotiation phase of the home-selling journey.
Step 5: Evaluating Offers: The Role of Your Agent
At this stage of the process, your trusted real estate agent becomes your invaluable ally. They will help you evaluate the incoming offers and, more importantly, is legally obligated to present all offers to you, the seller. It’s essential to remember not to take offense at any offer. Buyers are looking to secure the best deal for themselves or outbid competing offers, and this is a standard part of the negotiation process.
All offers, regardless of their initial terms, are opportunities. Your agent is there to negotiate on your behalf, and just because an offer starts low doesn’t mean it can’t be improved later. Therefore, it’s crucial to collaborate closely with your agent throughout this phase to achieve your desired outcome.
Key Elements to Consider When Evaluating Offers
When diving deeper into the home closing process, there are several critical elements to consider when reviewing offers:
- Sales Price: Naturally, the purchase price is a major consideration. It’s the figure that will have the most direct impact on your proceeds from the sale.
- Seller Concessions: These are requests from the buyers for the seller to cover certain costs, such as closing costs, title expenses, or even repairs. Seller concessions can affect your bottom line, so it’s essential to assess them carefully.
- Earnest Money: This is the money the buyer puts down as a sign of their commitment to the purchase. If the purchase agreement is breached due to the buyer failing to fulfill the contract, sellers typically retain the earnest money.
- Type of Financing: Consider whether the buyer is using cash or financing. Cash offers often close more quickly and with fewer complications, but it’s essential to evaluate the financial stability of buyers who are financing the purchase.
- Inspection Period: The length of the inspection period can impact the overall timeline of the sale.
- Contingencies: These are conditions that must be met for the offer to remain valid. Examples include appraised value, the sale of the buyer’s current home, or financing approval.
- Title Company: If you are paying for the buyer’s title insurance expenses, you may want to choose the title company or ensure it’s a reputable one.
- Closing Date: The closing date can be negotiated to suit your timeline. Make sure it aligns with your plans and expectations.
Step 6: The Home Closing Process “Under Contract”
The home closing process timeline begins once you accept the offer to purchase your home. This timeline for the closing process can fluctuate and is dependent upon the terms of the accepted offer. Besides the offer the timeline is primarily influenced by the current state of the real estate market and state regulations. In typical market conditions, during the home closing process, we often see closings occurring within a 30-day timeframe. However, there are several factors that can impact this schedule.
First and foremost, the type of loan being used by the buyer plays a significant role. Loans backed by entities like the Veterans Administration (VA), Federal Housing Administration (FHA), or the Tennessee Housing Development Agency (THDA) sometimes require a bit more time. It’s not uncommon for these loans to extend to a 45-day closing period.
Market dynamics also play a crucial role in the home closing process and timeline. If there’s a surge in demand, with many buyers entering the market and numerous loans being processed simultaneously, the closing timeline can stretch. This happens because lenders have more loans to process, and it might take a little longer to complete each transaction.
Other factors to consider that can affect your timeline to close include the buyer’s financial readiness, which can be categorized as either pre-qualification or pre-approval, results in title searches that may require legal resolutions, and the time needed to address and rectify repair requests.
The Negotiation Process
Next in the home closing process is negotiating. The negotiation process begins when you receive an offer and review it with your agent. If you’re not satisfied with the terms or want to make changes, you can initiate a counteroffer. This process involves modifying any elements of the initial offer that don’t align with your goals.
Keep in mind that all offers come with a time limit, typically 24 hours. During this window, you can decide to accept the offer as is or send a counteroffer. The buyer, in turn, has their own time limit to respond, and the negotiation process continues until both parties reach an agreement or decide to part ways.
Once both parties sign the agreed-upon offer and all parties are notified, the binding agreement date is established. This date marks the beginning of various timelines within the contract, such as earnest money deposit, loan application submission, inspection period, and resolution period.
Navigating the offer and negotiation phase is a critical step in the entire home closing process. It’s a dynamic process that requires careful consideration of various factors, effective communication with your agent, and a willingness to be flexible and patient. Ultimately, successful negotiations can lead to a mutually beneficial agreement moving you along the home closing process and closer to the exciting closing day.
Step 7: The Closing
As part of the home closing process, when we talk about closing, we’re referring to the moment when the sellers sign the necessary paperwork, and the buyer completes the purchase. It’s the culmination of the entire process, where all documents are signed, funds are transferred, and ownership is officially transferred. In essence, it’s the completion of the purchase and sale of the house.
The closing process involves several crucial steps:
- Location: In our market area, most closings take place at title companies. Occasionally, closings may occur with a real estate attorney, especially if they specialize in real estate transactions. The presence of an attorney ensures a smooth process.
- Signing Documents: At the closing, both the buyer and seller will sign a multitude of documents. These documents include the deed, which officially transfers ownership from the seller to the buyer. Additionally, any outstanding paperwork related to the mortgage or financing will be signed by the buyer.
- Funding: Funds are a critical part of closing. If you’re a seller, you can choose to have your proceeds from the sale wired to your preferred account or receive a physical check.
- Title Transfer: During the closing, the title of the property is officially transferred from the seller to the buyer. This is a pivotal moment that marks the legal transfer of ownership.
- Final Checks: Before concluding the closing, a series of final checks are performed to ensure that all aspects of the transaction are in order. This includes verifying that all necessary documents are signed correctly and that the funds have been transferred successfully.
For sellers, the closing represents the culmination of your home-selling journey. Whether you choose to have your proceeds wired to your account or receive a physical check, it’s a moment of achievement and transition.
As you embark on your next adventure, remember that the closing is the final step in the process, and once it’s complete, the new owners will take possession of their new home, and you can move forward with confidence, knowing you’ve successfully sold your home.