Closing time is more often referred to as escrow or the transaction. This is the time after an offer has been made by the buyer, accepted by the seller and the Earnest Money Deposit has been deposited with the escrow company. During closing time the buyers will do their due diligence inspections, complete any appraisals and finish up the loan process if the buyers obtaining financing and negotiate any repairs. Sellers won’t have too much to do unless there are specific actions or requests like repairs that were made in the California Residential Purchase Agreement or during the closing time through a repair request.
In order for a contract to become valid and the closing time process to begin, the contract must be executed by both parties and the earnest money depositor EMD deposited with the escrow company. Many buyers and sellers think that once contracts are signed by both parties that the contract is valid, this is simply not the case and in order for the escrow to begin the EMD must be deposited with the neutral third-party vendor such as an escrow company or attorney. Buyers will want to carefully read the purchase agreement and what stipulations have been set forth in liquidated damages as these instructions will dictate how the EMD will be handled in the event of a breach of contract by either party.
You Got Your Offer Accepted, Now It’s Closing Time
Once the contract is valid meaning it’s signed and the EMD has been deposited into escrow then the buyer will start their closing timeline. During this time a buyer unless otherwise stipulated in writing will have 17 days to do their due diligence on the property. Items like home inspections, pest inspections, appraisals, etc will all be done during this time. Additionally depending on if anything is found during those inspections the buyer may opt to request repairs during this time. During the inspection process the buyer may also be completing the last remaining details of their loan with the lender in the event the buyer is obtaining financing for the deal.
During closing time, sellers often take a more reactive approach in comparison to a buyer that must take a proactive approach because sellers normally aren’t the ones necessarily needing to push to get things done. In some cases, sellers will have items like a septic certification, roof certification, home warranty, repairs, etc that may have been requested by the buyers during the offer stages or even during the closing time through the inspection and repair request. The sellers role in this situation would be proactive to complete those items so that when the buyer has completed their items and is ready for their final walk through that all issues have been resolved and everyone moves forward to a smooth and successful closing.
Once all loose ends are tied up and everyone has completed the things they need to get done then it’s closing time! At this point the buyer will take into escrow any money they need to provide to close the deal and the escrow company will balance the transaction on a closing statement. Not to long ago we used to use a form called a HUD1, you can read more about this transition in our article Goodbye HUD1, Hello TRID. Once the closing statment is balanced the deal closes and everyone celebrates!