How To Get To The Closing Table

June 25, 2019 — By

Map and directions below….

by Sue Haynes

Sales Flow Chart
How Buyers and Sellers get from FOR SALE to SOLD

Please note that the following information is intended for use as a guideline only. All aspects of a real estate transaction are governed exclusively by legal documents that the realtors will use. Typically, these documents have been developed and copyrighted by the Georgia Association of Realtors (G.A.R.). In every case, if the information presented herein differs with those documents, those G.A.R. Documents as negotiated and signed by all parties will prevail.

Always read and understand all legal documents before you sign.

1.Sellers typically engage the services of a realtor to determine a reasonable listing price based on recent (past year) market comparables in the neighborhood. All paperwork relevant to the Seller’s listing agreement is completed and marketing efforts commence by the Listing Agent on behalf of the Seller.

2.Prior to making an offer on a house the Buyer needs to contact several mortgage companies to evaluate their loan products. We recommend that our clients talk with several different lenders in order to find the overall best product possible. Prior to making an offer on a house it is wise to get a Pre-qualification Letter from a lender that can accompany any offer that you make. This simply lets the Seller know that you stand a reasonable chance of having your loan ultimately approved. All lenders will know what a Pre-qualification Letter is.

3.At some point in time the Listing Agent (representing the Seller) receives a Purchase and Sales Agreement (offer) from a prospective Buyer via the Buyer’s Agent (representing the Buyer). Although not required by Georgia law, earnest money is typically provided by the Buyer and held by the selling broker. One percent of the dollar amount offered for the property is an amount frequently provided. This money will typically be held by the Buyer’s real estate brokerage and will eventually be applied towards the cost of the house or to reduce the Buyer’s closing costs.

4.The Purchase Agreement offer is reviewed and responded to within the allotted time frame, typically in the form of a Counteroffer by the Seller to the Buyer. (It is crucial to respond to ALL aspects of the contract within the allocated time frames stated in the Agreement until closing time).

5.Negotiations continue back and forth through the two agents until an agreement on price is reached and both buying and selling parties sign the Purchase Agreement. A condition known as “Binding Agreement” now exists. This is a critical date as practically every time-sensitive aspect of the transaction must be completed within “x” number of days from Binding Agreement.

6.The aforementioned Purchase Agreement is either an “As-Is” offer or “Subject to a Due Diligence Period”. As-Is means the Buyer is agreeing to buy the house as-is including all faults. In this case, the Seller has no obligations to make any repairs. However, most offers to purchase are made subject to a Due Diligence Period wherein the prospective Buyer has a certain number of days allocated to perform inspections, tests, surveys, determine home insurability, etc. The Buyer has the right to ask for repairs to be made but the Seller has no obligation to make them… Buyers and Sellers negotiate through their agents until hopefully they come to agreement about the Buyer’s requests. The prospective Buyer may terminate the contract at any time and for any reason during this negotiated Due Diligence Period. However, WRITTEN NOTICE must be given of such a decision during the allocated time period or the Buyer is subject to buying the property As-Is. If the contract is not terminated during the Due Diligence Period, the Buyer faces the very high probability of forfeiting their Earnest Money if they attempt to void the contract subsequent to this time period.

7.There is also a set time period wherein the Buyer needs to arrange for any loans necessary to purchase the property (usually 21-30 days). One form that is used to identify the terms of the loan is called a Conventional Loan Exhibit. (If you use a FHA or V.A. Loan there are additional guidelines to follow.) While this time period is typically referred to as the Financing Contingency it also includes provisions for an Appraisal Contingency. This means that the house must appraise for at least the purchase price for the transaction to move forward without any purchase modifications.

8.Once the home inspection (and any other tests and inspections such as termite inspections, radon tests, air quality tests, tests for mold and/or allergens, property surveys, structural analyses, etc.) has been completed a formal report is presented to the Seller via the agents for the two parties. The report is typically accompanied by an “Amendment to Address Concerns With Property” requesting certain repairs be made to the property. As mentioned above, these negotiations must be completed prior to the expiration of the Due Diligence Period (D.D.P.), otherwise the Buyer will be deemed to agree to purchase the property as-is. If for any reason the Buyer decides not to purchase the property, the decision must be given to the Seller in writing prior to the end of the D.D.P.

9.The Seller might counter to the Buyer’s request for repairs with a statement of repairs that they will or will not make. In some cases, the Seller may counter-offer that money be given at closing in lieu of repairs. This money is often used to reduce the price of the house or to help pay a Buyer’s closing costs.

10.Once repair issues have been negotiated and the Buyer has locked in their loan a closing date is firmed up and scheduled (typically) by the Buyer’s agent.

11.The Buyer conducts a walk-through inspection of the property typically the day before closing. All agreed-to repairs should have been made.

12.The Lender is required to furnish an advance copy of the Closing Document to the Buyer for the Buyer’s signature 3 days prior to closing. The signed CD is then sent to the attorney who will prepare a slightly different version for the Seller. All parties will have the opportunity to review their own side of the transaction prior to closing. All disbursements, pro-rata items, and proceeds amounts for both Buyer and Seller will be accounted for. The agents typically review this statement for accuracy with their clients prior to closing.

13.The Buyer comes to closing having already wired their down-payment funds to the appropriate account. The attorney will provide the Buyer with the correct wiring instructions several days before closing.) Also required of the Buyers are driver’s licenses (or a valid picture ID) plus proof of homeowner’s insurance for their new purchase.

14.We recommended that all Buyers purchase Buyer’s Title Insurance and also consider having a Survey of the property completed prior to closing. Title insurance can be arranged by the closing attorney at the request of the Buyer through their agent or their lender. The Buyer’s agent can provide a list of qualified surveyors to choose from, if a survey is desired.

15.If the Seller agrees to provide a Home Warranty for the Buyer the closing attorney will ensure that it is provided and will show this item on the Closing Document. Even if a Home Warranty is not provided by the Seller, we strongly recommend that Buyers purchase a home warranty on their own initiative.

All information presented herein is deemed reliable but is not guaranteed or warranted.

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