Closing Process
The buying and selling of a home can be an extremely complex and drawn-out process. Depending on the market and the condition of the property, it can take months or even up to a year. The closing is the final stage, which usually takes anywhere from 30 to 90 days. This process consists of the final transactional details and involves a title company, the buyers and sellers, real estate agents, and the lender.
For many people, the closing process is the most stressful period of a real estate transaction. Fortunately, some title companies are opting to use digital resources to provide virtual closing assistants for all parties involved. This software can act as a hub of communication and ensure everyone is on the same page. However, it still helps to understand what’s involved in the closing process. Keep reading to learn some of the integral steps.
An Escrow Account is Created
As the closing process gets underway, an escrow account will be created by a third party. This account will contain all the money and essential documents related to the closing. Creating the escrow account is a way to protect the buyer and seller from losing money or getting cheated during the transaction. A closing agent from the title company will review the escrow account to ensure everything’s in order. The money and document will remain in the account until the final closing. With a virtual closing assistant in place, the title company can automatically verify when a check was received and how to deliver the deposit. An AI-powered virtual closing assistant can also pull information from the title company’s system when needed by the buyers and sellers.
An important step in the closing process involves the completion of a title search and the acquisition of title insurance. This is done by the title company on behalf of the buyer. The title search involves the analysis of public records to determine if there are any liens or claims on the property. If anything is found, these issues need to be resolved before the closing. Title insurance is a type of indemnity insurance that protects the buyer from defects in the title that could result in financial loss. Title companies can benefit from a virtual closing assistant during this step. Once the title search and issuance have been completed, the virtual closing assistant can be set up to notify the appropriate parties.
A Home Inspection
Once a buyer puts a bid on a home, an inspection needs to be performed. It’s typically up to the buyer to schedule and pay for this. The inspector performs a thorough walk-through and generates a report. This report will outline any major issues such as foundation problems, outdated plumbing, or mold. If there are problems, the buyer can renegotiate for a lower price or ask the seller to fix the issues. A title company resource like a virtual closing assistant can inform the buyer and seller when the inspection is to take place. It can also field questions the buyer and seller may have about the home inspection.
Final Walkthrough and Necessary Paperwork
The last step in the closing process involves the buyer doing a final walkthrough of the home. This is necessary to ensure no damage has occurred since they last saw the house and that all required fixes have been made. Then, all the legal and closing documents should be signed. This is where a virtual closing assistant comes in handy. A virtual assistant can keep track of closing deadlines and provide all parties with the right documents.
Ensure a Smooth Title Closing
Whether you’re a buyer, real estate agent, or title company, the smoother the closing process goes, the better. Whether you’re a buyer, seller, or an agent working with either, working with a title company that uses a virtual closing assistant will make sure the closing process goes as smoothly as possible.
Alanna.ai develops flexible, scalable software for the title industry. To learn more, request a demo today.
FAQs
To close the deal on your home, you need a closing agent (also called a settlement or escrow agent). They'll coordinate document signing for all the parties, verify that both you and the seller have met the terms of the purchase agreement, and finally pay out all funds, transfer the title, and record the deed.
What are the four steps of a closing process for a home? ›
Overview: The House Closing Process
- Submitting necessary documents.
- Selecting a homeowner's insurance plan.
- Reviewing documents.
- Collecting your cash to close.
- Officially closing on the home.
This day consists of transferring funds from escrow, providing mortgage and title fees, and updating the deed of the house to your name. Basically, come closing day, you and the seller sign all the necessary papers to officially seal the deal.
What is the final step in the closing process? ›
The closing ceremony (or closing day) is the final step in the closing process. The buyer, seller, and closing attorney must be present at the agreed-upon date and time to finalize the sale.
What does closing process involves? ›
It involves identifying and recording all financial transactions, adjusting entries to reflect accurate balances, and closing temporary accounts. The primary goal of the closing process is to summarize financial activities, ensure accuracy in reporting, and facilitate informed decision-making by stakeholders.
What is the closing procedure? ›
The closing procedure, in the context of accounting, refers to the process of finalizing financial records and statements for a specific accounting period, such as a month, quarter, or year.
What are the four steps in the closing process? ›
The 4 Steps in the Closing Process
- Close revenue accounts to income summary (income summary is a temporary account)
- Close expense accounts to income summary.
- Close income summary to retained earnings.
- Close dividends (or withdrawals) to retained earnings.
The closing entry process consists of closing all temporary accounts, which include revenue, expense, and dividend (or withdrawal) accounts.
What is the first entry in the closing process? ›
The usual practice is one entry is made for revenue, one for expenses and a final entry for dividends. Thus, three entries usually occur during the closing process. The first entry closes revenue accounts to the retained earnings account.
What not to do after closing? ›
5 Things to Not Do After Closing Day
- Don't Ditch Your Documents. Closing day will leave you with a pile of paperwork that may be tempting to pack away. ...
- Don't Rush Renovations or Big Purchases. ...
- Don't Fall for Scams. ...
- Don't Be in a Hurry to Refinance. ...
- Don't Ignore Maintenance.
On average, closing on a house in California can take anywhere from 30 to 45 days, post-acceptance of an offer. This timeframe is fluid, influenced by the factors mentioned earlier. Each step, from financing approval to inspections, plays a crucial role in the overall timeline.
What is the best day to close on a house? ›
While any day is a good day to close on a desired property, real estate agents and attorneys typically prefer closes between Tuesday and Thursday for a practical reason. Closing real estate transactions requires both the buyer and seller—and their representative attorneys—to sign off on hundreds of pages of documents.
What does the closing process include? ›
On closing day itself, the homebuyer must sign lots of paperwork that finalizes the deal. Often there are many other parties present for closing day, including the seller, the lender, real estate agents, the closing agent and often an attorney who will also review the paperwork being signed.
Can a mortgage be denied after closing? ›
If your financial situation changes suddenly, for example, a significant loss of income or a large amount of new debt, then your loan could be denied. Issues related to the condition of the property can lead to a loan denial after closing.
What is closing stages? ›
The purpose of the closing phase in the project management lifecycle is to confirm completion of project deliverables to the satisfaction of the project sponsor, and to communicate final project disposition and status to all participants and stakeholders.
How long does the closing process normally take? ›
The closing date is when the house closing process wraps and you become the owner of your new home. The typical timeline to close on a house is between 30 – 45 days, but the timing varies for every transaction. When you close on your loan, it becomes final, and the money is disbursed.
What happens on the day of closing? ›
What happens on closing day for a buyer? No two closing days look the same, but there are a few key events that will occur. On closing day, you will sign your final closing documents, hand over your closing costs payment, and, once everything has been finalized, walk away with the keys to your new home.
