10 Steps to Close a Real Estate Deals
You researched and got your preferred real estate property. Now, how do you close a real estate deal? This part of buying real estate is the most important since you will be a property owner after closing the deal successfully.
It may seem easy to close a real estate deal, but don’t rush first. You still need to learn a lot before signing that sales agreement form.
This guide will teach you how to own property successfully without facing future obstacles.
Let’s get to the important steps you should take, without skipping any, to close a real estate deal without trouble.
Steps to Close a Real Estate Deal
Step 1: Have Your Funds Ready
After researching the type of real estate you should invest in, itâ€™s time to talk to your lender. At this point, you should know the amount of money you need to purchase your property. Therefore, you will only apply for a loan that is enough for the purchase and other related costs.
They could help boost your property purchase if you’ve had some savings. In addition, getting a huge loan will highly depend on your credit score and income level. A good credit score and a high-income level could help you get a reasonable loan.
Step 2: Get an Escrow Account
An escrow account is the best way to transact without losing your funds. Using Escrow protects your money from possible theft. You can get your funds back if you sense any signs of malicious activity during the property transfer.
After activating your escrow, you can deposit your funds there as you await the signing of the property transfer documents. Once everything goes well, you can release the funds to the seller.
Escrow services also protect the seller’s property since there is an assurance of payment. So, it’s a win-win situation when you both agree to use Escrow services.
Step 3: Do a Title Deed Search
This step is crucial since you will confirm the current property owners. Once you conduct a title search, you will also know the property ownership history, revealing all details.
This step will save you from potential conmanship since you will get to know the authenticity of the property you are about to buy.
In addition, this step will familiarise you with the documents you need to own property successfully.
Step 4: Hire a Real Estate Attorney
If you are a first-time real estate buyer, you don’t know the legal part of property transfer. That’s why you need to hire an attorney who can represent you in court once anything happens in the future.
An attorney will also ensure that the property ownership documents you sign are authentic. Therefore, you might not have to worry once you have a good attorney.
An attorney will handle all legal proceedings related to property transfer. That’s why you need to hire who has previous experience in property ownership and transfers.
You might also require some eyewitnesses when signing the property transfer documents. That will help in ensuring that you can handle any case related to your property that can arise in the future.
Step 5: Inspect the Property
Before signing the property transfer documents, you need to go through the property once more. Ensure that you like everything about the property you are purchasing.
Check for possible roof leaks, if all shingles are in place, paintings, floor, doors, and windows.
If there is any need for repairs, let the owner do it before you buy the property.
You should only pay for property that is ready for use. However, if the seller is not able to fix it, that takes us to the next step.
For the inspection process to go forward, you need to include an inspection contingency clause that protects you from accepting damaged property. If the seller isn’t willing to fix it, you can walk out of the contract without paying penalties.
Step 6: Ask For Negotiations
If you’ve some issues with the property quality, you can talk with the seller to reduce the price since you’ll do some repairs before using the property.
But that doesn’t mean you shouldn’t ask for negotiations if the property is in good condition. You can ask the seller to remove some costs involved in the transfer. Remember that sellers can take advantage if you are starting in real estate investment.
Step 7: Remove All Contingencies
Contingencies protect you if anything is wrong with the contract. You won’t pay any form of penalty if you leave the contract when the seller fails to meet some or all requirements in the contingency.
In addition, if you have a mortgage loan contingency, you cannot pay the penalty if you leave the contract in case you don’t get funds on time.
So, if everything is smooth during the contract signing, you can remove all contingencies involved.
Step 8: Do Final Touches
Do not assume everything is good, and continue with the signing. That may cost you in the future.
Ensure you crosscheck the property again to see whether the owner did repairs and if there was anything to fix. Again, check whether there are any new damages caused before signing.
Step 9: Sign The Sale Agreement Documents
This is the final step before you become the legal owner of the property. Ensure your attorney and witnesses are present during the signing.
Step 10: Store Your Ownership Documents Securely
After you’ve become the new property owner, keep all documents in a safe place.
This will help you in the future if there are any disputes with your property. Furthermore, you will still need the documents to resell the property later.
The Bottom Line
Now, you have the right procedure to follow when closing a real estate deal. Why don’t you go ahead and become the next property owner?
Frequently Asked Questions
- Why is closing a real estate deal so important?
Closing a real estate deal is critical in real estate investment since it’s the final step to making profits( for the seller) and owning the property(for the buyer).
- How long does a real estate deal take to close?
If everything goes as planned, it will take approximately 50 days to close a real estate deal.