A lot can go into closing on a house. Whether it takes four days or 45, here
are some of the things you should expect and how you can expedite the
process.
In most cases, the average time required to close on a home that is being purchased
with a mortgage is between 30 and 45 days, while a home purchased with cash can
close in four to 10 business days. There are a few steps widely recognized as the
standard sequence of events that make up the closing process, and each can impact
the timeline differently.
As you move through the process, it is always recommended that you partner with a
professional Realtor® to assist you with each step and ensure the smoothest
experience.
Establish the Purchase Agreement
This is where cost is agreed upon and any contingencies are listed. Once both buyer
and seller feel comfortable with the agreement, the process to prepare for closing can
begin.
Here, the buyer’s agent will use the information gathered from conversations with the
prospective buyers to prepare the purchase agreement. Because this is an official
contract, the Realtor® does not write the contract themselves; they typically have a
templated agreement made by a professional legal partner to ensure consistency and
accuracy.
Find a Title Company or Real Estate Attorney
A title company or real estate attorney can ensure that the seller is well within their
rights to sell the home, and the real estate attorney can also review the purchase
agreement and other documents to make sure everything looks good. While this is not
entirely necessary and may save time and money if avoided, this is still a recommended
step.
This is another great time to leverage the connections of the agent. Most real estate
professionals have established relationships with title companies, real estate attorneys
and other professionals in the space. They can facilitate a connection to ensure you are
working with a trusted source
Open an Escrow Account and Deposit Earnest Money
After the purchase agreement is signed by all parties, the buyer’s agent will collect
earnest money and deposit it into an escrow account.
An escrow account is where a third party can hold funds related to the purchase of the
home, providing a safe, unbiased way to protect both the buyer and seller throughout
the closing process. The escrow account also holds the “earnest money,” a deposit
made by the buyer to prove their intent and readiness to buy. If a buyer should back out
of the deal for any reason that is not justified by already agreed upon contingencies,
they run the risk of forfeiting the earnest money.
Submit a Loan Application and Review and Lock In Your Mortgage Choice
Obviously, cash buyers can skip this step as they will not be securing a mortgage, and it
often saves a good amount of time. For those financing, the mortgage application and
underwriting process can take between 30 and 60 days.
When the market is hot, a backlog of mortgage applications can slow down the
approval process. Once you receive a response to your application, you need to decide
on which mortgage term you will take and, if you have the option, choose between a
variable and fixed-rate loan.
It is important to keep in touch with your agent throughout this process. There are often
certain timelines associated with a purchase agreement, and keeping the agent in the
loop allows them to support the loan process in whatever way possible.
Schedule and Complete a Home Inspection
Many home inspection companies have existing relationships with agents. If your agent
has a preferred, trusted home inspector, using this referral can help you to expedite the
inspection process without sacrificing any confidence in the quality of the inspection.
The home inspection is another part of this process that is technically not
mandatory but highly recommended. Similar to the title company and real estate
attorney, skipping over the home inspection will lead to detrimental consequences on
the back end. Home inspections allow professionals with a trained eye to evaluate the
state of the home and report back on any issues, creating the opportunity for potential
buyers to request repairs — or at least go into the purchase well-informed — and sellers
to avoid legal action taken as a result of improper disclosure.
After the home inspection is completed, an important follow-up step is to schedule any
repairs, order additional inspections or negotiate the terms of the offer based on the
findings of the inspection.
Make Preparations for Closing and Move-in Day
Once everything else is ready, it’s time to prepare for closing day. Doing things like
scheduling transfer of utilities ahead of time, reviewing any available closing
documents, ensuring closing funds are available and looking for home insurance can
make sure closing day and move-in efforts go smoothly.
At this point in preparations, it can be a good time to schedule a final walkthrough
where the buyer and their agent can take one last look. Again, this is an optional step,
but it rarely hurts to have one last look before closing. This is the best way to ensure no
additional damage was done after the home inspection was completed and that any
promised repairs were completed.
