Real estate has been a hot ticket the last couple of years, particularly the residential real estate market. 2020 alone saw around 5.6 million homes change hands.
Of course, many of those buyers and many people considering a home purchase now are first-time home buyers. That means you may not know what to expect during a real estate transaction or what key events happen on a house closing timeline.
Closing on a house means a lot of things happen over the course of one to two months. Keep reading for a quick overview of core events that happen during that period of time.
Submit Offer
Technically, submitting the offer happens right before the official house closing timeline begins. It’s when your real estate agent conveys your offer to a seller’s agent and the seller accepts the offer.
Earnest Money
After the seller accepts your offer, you put up what’s called earnest money. The exact amount can vary from 1 percent up to 10 percent of the sale price of the property. In most cases, it falls somewhere in the 1 percent to 3 percent range.
That money goes into an escrow account managed by a third party, such as a bank or escrow service.
Title Search
Another key event is the title search. The title search essentially checks the property to ensure that there is nothing to prevent the current owner from selling the property, such as a lien or a court judgment.
Homeowners Insurance
Most buyers will use financing to make the home purchase. The mortgage company will require that you purchase homeowners insurance before you close on the house. Maintaining that insurance is typically required until you pay off the loan.
Inspections and Appraisal
Buyers typically get at least one inspection done on the house to look for problems with the structure and systems. You may also want a separate inspection specifically for pests.
You’ll also need an appraisal to ensure that the market value of the property isn’t under the asking price.
Final Negotiations
Depending on the inspections and appraisal, you may do another round of negotiations to cover expected repairs. You may also negotiate over closing costs and closing fees.
Closing
You’ll typically do a walkthrough the day before closing to inspect the house. Then, you’ll sign all of the paperwork and officially close on the house.
If the closing timeline is too long, you can often hasten the process by working with a we buy houses for cash company.
The House Closing Timeline and You
The house closing timeline is somewhat flexible. Buyers with all their ducks in a row can often shave some time off of the process.
On the other hand, surprises in the inspection can often lengthen the timeline as you renegotiate.
In general, though, you should expect the closing process to run the average of one to two months.
Looking for more insights or tips for handling real estate transactions? Check out some of the other posts over in our Real Estate category.
