The contract-to-close process often takes several weeks. Both parties have been working diligently to reach the actual stage when ownership is transferred. Their lives have largely revolved around getting to this point — the real estate closing.
The steps leading up to the closing
The closing date is agreed to between the parties during the contract negotiations and is inflexible unless both parties agree to change it. Once the price, closing date and other details are agreed to and signed off on, the property goes under contract. In most cases, here is the general timeline of the process:
- Inspection — usually a few business days after going under contract
- Attorney Review — normally begins by the end of the 5th business day
- Appraisal — often ordered immediately after attorney review ends
- Mortgage Contingency — tends to run between four to five weeks from contract date
- Final walkthrough — occurs just before the closing
- The closing
Where the real estate closing takes place
Closings in Illinois take place at a title company (or on rare occasions with a traveling representative elsewhere). The title company serves several purposes at a closing:
- Researches the chain of title (often done through the seller’s attorney)
- Issues a title policy, which protects the buyer should someone come forward thereafter to claim they one the home
- Acts as the “bank” — they deposit checks, as well as cut them at the conclusion for those due money back, such as:
- Buyers who have an overage from money given
- Seller’s proceeds from the sale of the home
How buyers prepare for the closing
Since not all of the buyer’s down payment has been given at this point, they are making sure all their remaining funds are ready to be delivered. Buyers should discuss the balance expected with both their lender and attorney, as a method of double-checking the appropriate amount to cover their remaining down payment and closing costs.
Regulations require that buyers wire any outstanding funds to the title company if their total down payment exceeds $50,000 — if it’s less than that, they can bring a cashier’s check. There has been a lot of wire fraud in recent years, so always take extreme caution when wiring money.
The items that buyers should always bring to the real estate closing are:
- Their state-issued identification card
- A personal checkbook (for any small, incidental balance)
- A pair of hand grips (I’ll explain later)
How sellers prepare for the closing
The sellers usually have had their belongings in the home, so their main responsibility is to get everything moved out before the closing without causing any damage.
Who attends the real estate closing
There are numerous people involved in a real estate transaction. However, only a few of them attend the closing:
- The title rep — a title company must process a real estate closing
- The buyer(s) — since mortgage documents are being signed, buyers must (except in very rare instances) attend the closing
- The buyer’s attorney — who explains all the documents being signed (lenders generally require hand-signed documents, or “wet signatures” at closings), also ensuring the buyer’s best interests are overseen
- The seller’s attorney — their attendance is closer to 50/50, as they have less “in person” work to be done, and what is needed can often be done remotely
- Not required but are often/sometimes there:
- The buyer’s and seller’s realtors and/or their representatives
- A representative from the lender
- Sellers, who are being released from their responsibilities and can sign ahead of time in front of a notary, often do not attend the closing
What happens at the closing
While it’s the culmination of a long and detailed process — and where the actual transfer of ownership of a home takes place — a real estate closing is often rather uneventful. Traditionally, they take at least two hours — the first 45 minutes are when buyers are feverishly signing all the documents, followed by an hour or more of talking about the weather and how their favorite team is doing. (Note: this is when the handgrips come in — both to help hands sore from signing, and just to pass the time.) In recent years, some lenders have been able to speed this process up to about an hour, but don’t assume that’s the norm!
Regardless of how many times a person has gone through a real estate closing, closing day is one of excitement, emotion and/or relief. For first-time buyers, the closing is a whirlwind — they’ve been so involved in what to do next, it’s hard to believe that they actually now own the home. They needn’t worry though — they still have the move ahead of them!