Navigating Real Estate Purchases: A Step-by-Step Guide

Real estate purchases mark a significant milestone in both residential and commercial property transactions. However, the closing process can be complex and overwhelming without a clear understanding of its intricacies. Here is a step-by-step guide to help you navigate real estate closings with confidence.

Step 1: Getting Funds and Financing in Place

You need to know what funds (savings, investment funds, gift money from relatives, and/or income) you have in place to make a purchase; and if financing your purchase with a loan, you want to get prequalified for a mortgage before beginning your property search.

Step 2: Finding a Property

Before you need a lawyer, you need to find property. Whether you are first time homebuyer or a seasoned real estate investor, you will need to find properties to make a purchase offer on. You can do this yourself with use of the internet and your legs and vehicle. Or you can work with a real estate agent, who can do internet searching and legwork for you. In a tough sellers’ market, we are currently in, both locally and nationally, this can be tricky. Perseverance is key. Don’t give up.

Step 3: Making the Offer

At this stage, if working with a real estate agent, they will draft the contract for you and present the offer to the seller’s real estate agent. If not working with an agent, the attorneys at VanDette Law PLLC like Patrick Makin and Rich Morrisroe can prepare the contract offer for you and present it to the seller or seller’s attorney.

Step 4: Working through Any Contingencies

Standard real estate contracts typically include two important contingencies at the front end of a real estate deal, the attorney approval period, typically 3 to 5 business days from contract execution and receipt; and the home inspection contingency, where you formally conduct a home inspection with a certified home inspector, typically within 5 to 10 business days from the contract execution. These contingencies allow you an out as a buyer if you have second thoughts, or the property needs more work than anticipated. However, in tighter markets, where properties are not as available and good homes are subject to multiple offers, these contingencies can be waived. Discuss the pros and cons of doing so with your agent and your attorney if possible. VanDette Law PLLC can help you make an informed decision.

Step 5: Conducting Due Diligence

By performing these investigations and other relevant inquiries, buyers can make informed decisions and address any concerns prior to closing. This diligent approach minimizes potential risks and ensures a smoother closing process. Do your due diligence by:

• Identifying any potential issues or encumbrances that may impact the property’s value or transferability.
• Property inspections to thoroughly examine the property’s physical condition, uncovering any hidden defects or necessary repairs.
• Title searches to verify ownership and reveal any outstanding liens or claims against the property.
• Surveys to establish property boundaries and identify any encroachments or easements.

Step 6: Managing Financial Considerations

• Several different financial considerations can significantly impact the real estate transaction, including down payments, loan funding, escrow accounts, prorated expenses, and closing costs. Understanding these financial aspects is vital for buyers and sellers, as it enables them to navigate the complexities of monetary transactions and ensure a smooth closing process.

Step 7: The Waiting Game—Loan Underwriting & Title Work

This is the toughest step because it is the longest timewise and most mysterious for buyers, even for some real estate agents. This is the period after you have completed your full application for the mortgage and the bank does its underwriting process, where they check your credit, income, employment history, and debt load to see if the loan is something the lender feels confident you can pay back. It also involves the bank getting an appraisal of the property’s value. This process can take anywhere from three to six weeks, sometimes longer, where additional grants and soft second mortgages are involved that help reduce closing costs.

Moreover, it is during this time that the seller’s attorney gets the property’s paperwork ready for closing, working with the municipalities to gather tax information and history, gathering the title search or title abstract so that it can be updated and sent to the purchaser’s attorney and the lender’s attorney for review and for ordering title insurance commitment for the purchaser, while also getting the survey ordered, and doing any title clean up if necessary to prepare for closing.

Step 8: Preparing for the Closing

This involves scheduling the closing date, which should be mutually convenient for all parties involved. Prior to the closing, conducting a final walkthrough allows the buyer to ensure the property is in the agreed-upon condition. Addressing any outstanding issues and ensuring all necessary contingencies and conditions are met before proceeding is essential.

Clear communication and coordination among buyers, sellers, real estate agents, and lenders play a vital role in ensuring a seamless closing process. This includes promptly providing requested documents, addressing any concerns or questions, and staying in close contact with all parties involved. By maintaining open lines of communication and diligent coordination, the preparation stage can help set the foundation for a successful closing.

Step 9: Understanding Closing Documents

Familiarizing yourself with these documents is crucial as they define your rights, obligations, and the financial aspects of the transaction. Consider consulting with a real estate attorney at VanDette Law PLLC to ensure a thorough understanding of the purpose and significance of these documents in your specific real estate closing. Key documents include:

• The purchase agreement which outlines the terms and conditions of the sale
• The deed is the legal document transferring ownership from the seller to the buyer
• Title insurance provides protection against any potential issues with the property’s title
• The closing disclosure details the financial aspects of the transaction, including loan terms, closing costs, and prorated expenses.
• Loan documents outline the terms of the mortgage or financing arrangement.

Additional agreements may be specific to the transaction, such as addendums or contingencies.

Step 10: Closing Day and Finalizing the Transaction

On this day, various activities and procedures take place to ensure the smooth finalization of the transaction. The parties involved, including buyers, sellers, attorneys, and sometimes lenders, gather to sign the necessary documents. These documents may include the deed, closing disclosure, loan documents, and any additional agreements specific to the transaction. Simultaneously, funds are distributed according to the agreed-upon terms, ensuring that payments, such as the purchase price and closing costs, are made as specified.

Thorough review and diligence during this final stage are vital, as errors or oversights could have significant implications. By approaching closing day with diligence and attention to detail, all parties can finalize the transaction smoothly and confidently.

Legal Considerations and the Role of Attorneys

Our attorneys at VanDette Law PLLC bring a deep understanding of the legal intricacies involved in real estate transactions, ensuring that all legal requirements are met throughout the closing process. We will meticulously review contracts, identify any potential legal issues or concerns, and provide necessary guidance to protect the rights and interests of their clients.

By involving an attorney from the beginning, buyers and sellers can mitigate risks, navigate potential legal complexities, and make informed decisions. Attorneys act as advocates, negotiating on behalf of their clients and providing guidance on matters such as title issues, liens, and financing.

Contact us at (716) 806-3500 to learn more about how we can assist you in navigating your residential or commercial real estate closing with ease and peace of mind.