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Prepare for closing and your next move!

Step 10 - Prepare for closing and your next move!

After signing a contract with a buyer, a number of things must happen to complete your sale. Download our Seller Closing Checklist or read the information below.

Attorney Review
The process begins by having your attorney review your contract to make sure your interest is properly protected. If your attorney questions any of the contract terms, then your attorney may raise objections and modify the contract, or he or she can disapprove your contract.

If your contract is approved, the buyer and you must work together to remove all contract contingencies. The most common contingencies include home inspections, mortgage contingencies and existing home sales.

Inspection Contingencies
Today, very few properties are sold in “as is” condition. If you chose not to perform property inspections before marketing your property, then be prepared for a few surprises. Like sellers, buyers are usually disappointed when deficiencies are found. If your property was not pre-inspected, be prepared to obtain estimates or negotiate items that need repair.

Ordering, completing and reviewing inspections can sometimes take 1 to 3 weeks. If inspection problems arise, additional time will be needed to obtain professional contractor estimates. After estimates are obtained, buyers and sellers can negotiate how repairs will made and paid for. If you don’t want delays, inspect your property before marketing it!

Most inspections will include a general home inspection, radon and termite test. If you have private sewer and water systems, then the buyer will probably also have your septic and well tested, too. Bad weather conditions and busy inspector schedules may cause inspection delays, so plan accordingly. Do not pump your septic tank prior to testing because doing so will invalidate your results.

The Lender’s Appraisal
Buyers usually take mortgage application after all inspection issues have been resolved. Even though they are pre-qualified today, most buyers are still required to take formal application within the time frame that is outlined in the sales contract. The normal time period is 5-10 days, unless the buyer has an existing home to sell. When taking application, buyers must provide the lender with a copy of the sales contract. The lender will then order an appraisal of the property. The process usually takes between 1-2 weeks. However, the process can sometimes take longer, especially during low interest rate periods when many owners are refinancing their properties.

Sale Contingencies
If the buyer has a home to sell, this is known as a sale contingency. When a sale contingency exists, inspections and appraisals are often delayed until the buyer has received a contract on his or her home. Most buyers prefer not to pay for inspections or appraisals until they know their home is under contract. Sale contingencies should allow sellers to continue to market and show their properties to other potential buyers. Sometimes a new buyer will come without a sale contingency and bump the first offer. For more information on sale contingencies, refer to our sale contingency section.

Property Survey
The mortgage process may also require a property survey. The purpose of the survey is to make sure there are no encroachments to your property. Frequently, instead of requiring a new survey, a survey affidavit can be signed by the seller.

Underwriting and Mortgage Commitment
After a lender has received all the necessary information from the buyer, the buyer’s application is submitted to the lender’s underwriting department. The underwriter reviews all documents for accuracy. If all information meets the underwriter’s approval, the lender will approve the loan and issue a commitment letter to the buyer outlining the terms and conditions of the loan. The commitment letter must be signed by the buyer and returned to the lender. All terms and conditions of the mortgage commitment must be met by the buyer before the loan is allowed to close. Review a sample commitment letter.

Marketable Title
Once the buyer has received his or her commitment letter, the next step requires examining the seller’s property title. The seller’s attorney is responsible for updating the title and making sure it is marketable. The title must be free of liens and other objectionable issues. A clouded title can delay a sale, so it is best to allow your attorney to review your title prior to marketing your property. The lender’s and buyer’s attorney will also examine the title to determine if there are any liens against the property. In some states, title insurance policies and closing agents may replace the duties of an attorney.

Prior to Closing
All existing mortgages and home equity loans must be paid in full prior to or at time of closing. You should notify your lender(s) that you will be paying off your mortgage or home equity loans. Check your account balances and inform your attorney of the balances. Use our seller net proceeds form to calculate the anticipated equity from your sale. Next, make sure all contract contingencies have been met and stay in touch with your attorney or closing agent until a closing date is scheduled.
Once your closing date is scheduled, contact your cable, electric, gas, oil, and propane companies. Advise them of your final moving date. Check with your post office and have your mail forwarded to your new residence. Cancel any newspaper subscriptions and insurance policies. If moving out of town, obtain your medical records and review our moving checklist.

It is customary for a buyer to perform a final “walk through inspection” a day or two before closing. The buyer who will want to make sure all necessary repairs have been completed and will want to see that the property is delivered in acceptable condition. If problems arise at this point, your closing may be delayed, or you may have to hold some money in escrow until all issues are resolved.

Closings frequently occur within 30 - 60 days after a contract has been signed. At closing, the closing agent or attorneys ensure all monies are properly collected and distributed and all taxes and utility bills are properly prorated. They make sure all existing loans are paid in full and they transfer the deed from seller to buyer. For more information about the closing process, consult an attorney in our directory and view our closing and moving checklists.

Disclaimer: While each state or county may have different laws, it may be necessary to seek additional counsel in the county where you reside. For more professional advice refer to our Helpful Pros Directory.

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