Closing the Sale
Kierman Realtors agents have the extensive training and experience needed to secure the purchase offer, negotiate the best price and most advantageous purchase agreement terms, and help you to feel comfortable about the selling process. The closing process involves a legal offer to purchase, including a deposit, and may also involve counteroffers, counter-counteroffers and beyond. To be secure, a seller should have ample knowledge of the legal documents involved in a real estate transaction, including disclosure statements, financing agreements, closing cost statements, title transferal and insurance, and a host of other documents.
Having an experienced Kierman Realtors real estate professional on your side during this process provides both protection from misrepresentation and guidance through the process. Your Kierman Realtors agent has the necessary experience to smooth-out the sticking points of the negotiating process regarding purchase price, contingencies, and any other stipulation that could potentially sour the deal, and make sure you get the most returns from the sale of your property. Kierman Realtors agents are also very skilled at preparing the needed documents and handling the closing process. We strive to surpass the competition by exceeding your expectations.
Purchase Offers
When you find a prospective buyer who wants to purchase your property, the next step is to receive official notification that they are ready to buy. In real estate, this is done with a formal Purchase Offer. Now, the buyer could simply call and let you know the good news, but that wouldn’t prevent the prospective buyer from changing their mind later, thus spoiling other opportunities you may have to sell the property to someone else. A formal purchase offer should absolutely be done in writing. As the old saying goes, “if it is not in writing, it didn’t happen.”
The written purchase offer is usually accompanied by a deposit check, which is sometimes called earnest money or a binder. The deposit is held in an escrow account, which is a special bank account held by a third party such as an attorney, a broker, or a bank. The deposit in escrow is a good faith agreement to protect both parties and the third party holds this money while the transaction takes place. The buyer is protected from the seller not following through on written contingencies. The money in escrow can be returned if contingency cl_auses were not met. The seller is protected from the buyer reneging on the deal without just reason. If this is the case, the seller will keep the deposit amount.
The following are essential characteristics of a written Purchase Offer:
- Legal address and description of property
- Price of the property
- Amount of Deposit to be held in Escrow
- Terms of payment
- Rate of interest
- Seller’s duty to provide proof of Title
- Date of closing
- Conditions if Purchaser/Seller defaults
- Contingency Clauses
- Signatures of parties involved
The purchase offer is where the buyer will address any concerns that they have about the property. These include any defects or problems they may have discovered when the property was inspected. If the buyer wants these defects or problems corrected before completing the sale, you should include “Contingency Cl_auses” in the purchase agreement, meaning the sale is contingent on the correction of these issues. Contingency cl_auses are also known as the “subject tos” of a purchase agreement, as the legal term “subject to” often appears before the issue to be rectified.
If the buyer has any concerns about the property whatsoever; they must address them in the purchase offer. Otherwise, these items may never be addressed.
Examples of the contents of some contingent cl_auses are as follows:
- Subject to a professional inspection
- Subject to the replacement of the kitchen faucet
- Subject to review by buyer’s attorney
- Subject to buyer’s approval of title insurance
“Subject tos” or contingencies can also protect the buyer from complications that have nothing to do with the seller, such as:
- Subject to approval of buyer’s spouse
- Subject to buyer receiving financing
- Subject to the sale of buyer’s existing home
Your Kierman Realtors agent will have a great deal of experience in creating secure purchase offers that prevent any complications before or after the sale.
Negotiating
Once you have received a purchase offer, you are bound by the terms of that offer once you accept it. Keep in mind, however, that if the you refuse the offer, you cannot change your mind and reuse the same purchase offer that you previously declined. If you change your mind, you will need to receive another written offer from the buyer. In most instances, you would neither accept nor refuse an offer. Instead, you should probably provide a counter-offer that is more to your liking. This is a statement that modifies the original offer in some way. The price of the house is a common stumbling block that requires a counteroffer to be made.
Some counteroffers are done on the same paper as the offer. In this case, you might simply cross out the disputed part of the offer and change it to read something that is more favorable to you. You must initial this change in order for this to be a legal counteroffer.
Other counteroffers may come in the form of another statement. An example of a counteroffer follows below.
Once a counteroffer is made, the seller is bound by the terms of that document. After a counteroffer has been given, the buyer is then able to give a counter-counteroffer if they don’t agree with the terms of the counteroffer. Too much haggling may cause hard feelings and deteriorate the deal. Make sure that the items in question are worth negotiating over, and always establish in advance the line at which you will walk away.
Offers, counteroffers, and counter-counteroffers are legally binding agreements if accepted. For this reason, you should only accept an offer if you are willing to live by the terms of it. Further negotiation may be necessary after a purchase offer is accepted, regarding the contingencies specified in the agreement. The seller is bound to certify that each contingency stipulated in the purchase agreement has been successfully addressed to the buyers satisfaction. If the seller tries to address the contingencies in the most minimal way, or if the buyer has unreasonable expectations, then further haggling can ensue which can delay the closing of the sale and frustrate the process.
Your Kierman Realtors agent has the necessary experience to smooth-out the sticking points of the negotiating process regarding purchase price, contingencies, and any other stipulation that could potentially sour the deal, and make sure you get the most money in the least amount of time for your property. At Kierman Realtors, your satisfaction is our most valued asset.
Seller Certifications
In order to close the purchase and sale process, you need to be sure that all the necessary paperwork has been provided and that any contingencies described in the purchase agreement have been satisfied. The proof that everything needed to complete the sale has been provided is referred to as Seller Certification – where the seller certifies the provision of necessary documentation or the completion of their assigned tasks.
Necessary Documentation Before you sell your property, it is important that you provide the buyer with all the documentation they require to close the purchase and sale process. The three documents you absolutely must provide are the deed, survey, and contingency removal.
Deed The deed is a very important document that is absolutely necessary in the sale of a house. A deed is a written and signed document which transmits ownership from one party to another. It is the seller’s responsibility to secure the deed before the close of the sale. The deed on the house must be present for the closing of the sale to take place.
Survey A survey shows the dimensions and outline of the lot and any structures or systems that are on the lot (gas and water mains, septic systems, wells, etc.). The buyer’s lending institution will probably require that you secure a new survey of the property prior to financing. The seller should be able to provide a survey of the lot being sold. If you don’t have one handy, the town where the property is located should have a copy. Before a new survey is engineered, however, you should go over the existing survey to verify the characteristics of the location and any problems that may exist regarding the local zoning regulations and/or setbacks (distances from the road/neighbor/well/etc. that the building must be). It is a good idea to clear up any problems about property lines that may arise in the future.
Disclosure Requirements By law, the seller must disclose any defects or problems that exist in the building or on the property before accepting a purchase offer. If the roof leaks, if the septic system fails, or if the toilet won’t stop running when flushed, the seller must make the potential buyer aware of these defects before accepting the purchase offer. These defects will either be accepted by the buyer (usually in relation to a reduced price), or they become contingencies in the purchase offer that must be addressed before the sale can be closed.
Contingency Removal Contingency removal refers to certification that each of the contingencies stipulated in the purchase agreement have been addressed successfully. This is kind of a check-list that the buyer and seller can go over prior to the closing of the sale to confirm that the issues have been taken care of to the buyer’s satisfaction. Contingencies will often develop in regard to a “subject to building inspection” contingency in the purchase offer, as building inspections will often uncover termites, rotted sills, and other common defects that the owner may have been unaware of. Further negotiation may be necessary regarding the acceptance of the seller’s certification, particularly if the seller tries to address the contingencies in the most minimal way, or if the buyer has unreasonable expectations. Your Kierman Realtors agent has the necessary experience to smooth-out the sticking points of the negotiating process regarding purchase price, contingencies, and any other stipulation that could potentially sour the deal,and make sure you get the maximum value for your property.
Other Documentation Buyers may request other documents at the same time they request the deed and survey. These documents may not be essential to the closing, but they may help to ease the buyer’s mind about the purchase. Keep in mind that you are not legally bound to provide this information, but if the documents are important to the buyer, you may want to provide them. Some of the documents the buyer may request are as follows:
Expense records may be of interest so that the buyer can get an idea of what your building maintenance expenses have been. For this reason, the buyer may ask for a copy of the following bills:
- heat
- electricity
- water
- sewer
The buyer might also request a copy of the your mortgage, in order to determine if there is a cl_ause in the mortgage that states it is “assumable.” An assumable mortgage is one that allows the buyer of a house to take over, or assume, what is left on the mortgage. This is a very convenient way for the buyer to lower their responsibility for a down payment, which can make your property more attractive than a competitive property.
Tax records can also be useful to the buyer. These will show the amount of annual tax, and information on the last assessment.
Your Kierman Realtors agent can help you to obtain all the documentation you will need to make sure that the negotiating and closing process goes smoothly.
Preparing Legal Documents
The legal documents that will be passed on the day of the closing will include the Settlement Statement, title insurance, warranty deed, the mortgage, and the note. It is the buyer’s responsibility that there are no problems with getting these particular items. Your attorney and Kierman Realtors agent should help in this process so there are no surprises at the closing.
The Settlement Statement is a Housing and Urban Development form that, under the Real Estate Settlement Act (RESPA), the lending institution is required to provide to the buyer. This statement breaks out the buyer’s expenses and credits.
Title Insurance is a contract between the buyer/lending institution and a title insurance company. The contract protects against defects in the title.
A Warranty Deed guarantees that the title being passed is good.
The Mortgage is a document given by the buyer that is security for the loan.
The Promissory Note is written assurance that the buyer will pay a specified amount of money to someone.
The buyer’s attorney and financial institution may have other documents that need to be dealt with as well. These documents will vary depending on the situation of the sale. The above-mentioned, however, are standard documents that will need to be prepared for the closing of the purchase.
A Kierman Realtors agent can help you to better understand these documents and the processes involved in the closing process.
Closing the Sale
After all the negotiating is finalized, the offer is accepted, the seller certifications are accepted, and the legal documents are prepared, it is time to bring the property purchasing process to a close. The “closing” is sometimes conducted as a kind of ceremony, where all the interested parties gather together in a conference room, or even at the home, to finalize the legal agreements. Most of the time, though, the majority of the process is conducted as an administrative process between attorneys. In either case, the closing is managed by executing the following ten steps:
- The offer is officially accepted, with all disclosure and contingencies clearly specified
- All “subject tos” regarding the buyer’s qualifications are satisfied
- All inspections are complete and contingencies regarding the seller are removed
- Seller provides disclosure statement and certification of contingency removal
- Final buyer walk through is completed
- Final negotiations are complete
- Legal documents are prepared
- Legal documents undergo final review
- Proceeds are delivered to seller
- Closing Statement and Deed are provided to buyer
If the property is being financed, the buyer will also be responsible to pay fees associated with the mortgage before you can complete the closing process. Your Kierman Realtors agent can help to make sure the buyer is aware of these extra costs and prepared to pay them.
Kierman Realtors agents are very skilled at handling the closing process, and you can count on them to make your property purchase as simple and worry-free as possible.
At Kierman Realtors, your satisfaction is our most valued asset!
