Basic steps of a Home Sale
The first step in a real estate transaction involves the listing agreement. The legal contract must list a sales price, state a commission rate paid to the real estate agents involved in the sale, and also outline the length of time for the property to remain on the market. Many states, including Texas and California, require sellers to fill out property disclosures listing physical information about the house and land, such as age of the roof and any known problems with flooding. The federal government requires sellers to disclose whether this is lead paint in the home and the presence of any known sex offenders living in the neighborhood.
The written, formal real estate contract lists the price and the ideal terms for a potential sale. The buyer presents a formal, written offer stating the offered price in the next step. The buyer also agrees or counters the terms of the sale as outlined by the seller, including the length of time allowed to close the sale. When the two sides come to an agreement on all points, both sign the official sales contract.
Opening escrow is the next step after both buyer and seller sign the sales contract. Escrow describes the neutral party holding the contracts and funds involved in the transaction. Not all areas use escrow, and in some places an attorney serves as an escrow officer. Escrow ensures all parties meet the terms as outlined in the contract. All money channels through escrow and is released according to the sales agreement. Some escrow offices combine the legal title search of the property to ensure the owner has the right to sell the real estate. Some regions use a separate title office that submits the property title report to the escrow service for official approval by both the lender and the new buyer.
Inspections occur within the first few days of the contract agreement. Possible inspections include a search for insect infestation, quality of the roof and an inspection covering appliances and heating and cooling systems. Some inspectors handle multiple evaluations during a single general inspection. The buyer must include the request to hire professional inspectors in the contract agreement, and the buyer generally pays the cost for the inspections. When the seller’s disclosure and the home inspection reports fail to match, the buyer has the option of renegotiating or walking away from the transaction.
The next step involves mortgage approval. The sales contract lists the number of days allowed to obtain a new loan when the buyer needs a mortgage to pay for the property. The lending process typically requires an escrow period of between 30 and 60 days to complete the underwriting examination of the worth of the house and the credit worthiness of the new buyer.
The final step to close the transaction requires the seller to transfer the legal title, or the deed in some states, to the new owner. At the closing, both buyer and seller receive the final closing documents, including title and loan paperwork, and the house keys change hands.