This is part 2 of a 2 part series; please click here to read part 1.
After you have received an acceptable offer on your home and you are pending sale the next step is to make it through the escrow period and successfully close the sale. Below is an article that outlines what to expect during the escrow period and what we consider to be best practices while you are selling your home.
Once the terms are negotiated with you and the buyer escrow officially opens and the earnest money from the buyer is deposited into the escrow account. Earnest money is money that the buyer gives at the beginning of the transaction to show you, the seller, that they are serious about purchasing your home and that money is held in escrow until the deal closes and is credited to the buyer’s down payment. The inspection period will begin once there is mutual acceptance on the offer and the purchaser generally has 10 business days to perform inspections and negotiate repairs. Typical inspections are a general home inspection, a sewer scope and a radon test. The radon tests are done on older homes with basements as radon is a gas that comes up from the ground that can be damaging.
The buyers will write a repair addendum to the deal if there are necessary repairs in order for them to finance the home or if there are issues that are unacceptable to them. Some buyers will ask you the seller to do the repairs and others will ask for a reduction in the price. This is another time when negotiating comes into play and it is extremely important to communicate with your agent. Sometimes there is nothing that needs to be done and the buyer releases the inspection contingency, this is the best case scenario for everyone. Other times the list of repairs is long and in the end reducing the price to compensate the buyers for the repairs is easier for you. Repairs that are made are usually required to be done by a licensed contractor and some buyers will request a re-inspection once the work is done to ensure it is up to par.
After repairs are negotiated the next step is for the buyer’s lender to order the appraisal and move forward with their financing. If the transaction is an all cash transaction no appraisal is necessary, but the buyer might still want one for themselves. This is a good time to start moving things out and planning on where you will go, if this is not already done. When the transaction closes it is expected that the home is “broom clean” and it is always polite to make sure the floors are swept and surfaces not left dirty. Best practice is to only leave what is requested by the buyer and remove everything else, even if you do not want the stuff. Donate it and take care of it yourself, the buyers should not have to deal with that. This is also the time where repairs need to be completed if you agreed to handle them. It is always good to hire a licensed contractor to do the repairs, providing receipts to the new home owner would be above and beyond, unless requested in the repair addendum. It is crucial for the repairs to be done in a timely manner and properly, with permits if required by the city. Communication with your agent is crucial at this time as well; they are the one that is relaying the info to the buyer’s agent.
Once all the repairs are complete and the appraisal is done it is time to close the deal! The buyers lender will draw up all the closing documents that they need to sign and your escrow officer will draw up the documents that you need to sign. In general the appointment to sign the documents at the title company will take about a half an hour for the sellers, sometimes this varies as all transactions are unique. You can request that your agent accompany you to closing or you can go to closing solo, the escrow officer will be there and guide you through the process so having your agent there is really not necessary. It is always ok to ask for what you feel you need from your agent, that is why you hired them! It is important to sign the documents within a reasonable time frame in order to close the transaction on time. This is a time period when going out of town or being inaccessible would not be a good thing. Communicate to your agent and escrow officer as soon as possible if you must be out of town close to the deals closing date. Sometimes title companies can set up a mobile signing and accommodate where you are in order to get the deal closed on time.
The final step is the actual closing which happens once all the documents are signed and the sale has recorded with the county. At this point keys are exchanged and funds are disbursed. The title company will ask you if you prefer a mailed check or wired funds. They will send you your check after everything from escrow is paid, commissions and such. You can expect a call from the escrow agent and also your realtor at this time to congratulate you on the closing of your sale. At this point everything is done and it is time for you to enjoy tour new space and say goodbye to your other home.
Overall the keys to a successful closing are open communication with your Realtor and willingness to be fair, honest and flexible while selling your home.
Written by Amanda Folkestad and Brian Porter