The home buying process can be a long and complicated one at the best of times. Between all the paperwork, home viewings and bidding wars, it can put a lot of stress on both buyers and sellers. But, nothing feels better than when you get to the end of the process and an offer is accepted on what could be your dream home.
While it may be a relief, your work isn’t quite done yet. Between an offer being accepted and the actual closing date, there is still a bit of work to be done. And, though you are most of the way there, these final steps are important to make sure everything goes right.
In fact, an offer is only the beginning of a process of working out a solid deal between buyer and seller and it is possible, should a deal fail to be made, that the transaction will not go through. In other cases, though the deal works out in the end, it may face significant delays before closing as a result of actions from either the buyer or the seller.
For both the buyer and seller, there are some things you need to take care of before you can officially close your deal. Let’s look at what you need to know from both sides.
Speak to your real estate lawyer
There are a lot of complex legal matters that only a real estate lawyer can handle. In fact, working with a real estate lawyer is a matter of standard practice and is the law. Your lawyer has many jobs to do before the home sale can be closed. For one, they will work to complete a title search and apply for title insurance as well as to facilitate the title transfer itself.
Lawyers also help buyers work with lenders to finalize their mortgage terms. This can be especially important if this is your first mortgage as they can help you learn what to expect once you receive financing. You should also be prepared to provide your lawyer with any documents they may need to complete this process. Make sure to get these to them as soon as possible to avoid any delays.
Your lawyer will also help by preparing the purchase agreement. They will also handle related tasks like managing the transfer of titles and funds as well as registering the sale and mortgage with the relevant legal and government entities.
You will also soon have to pay for the services of your lawyer. Be sure to budget up to $1,000 or more to cover these legal fees since they will make up a large part of your closing costs.
Both buyer and seller will need to work with their own lawyer for this process as each party needs to be properly represented and there are various requirements that each lawyer will need to handle. Overall, your lawyer is one of the most important and helpful people when it comes to your home sale so make sure to work with them as much as possible to avoid delays.
Make sure your deposit is in order
Most home sales will involve a deposit from the buyer. This is done to show that the buyer is serious about their offer, that they have funds, and to protect the seller from a deal that fails. As the buyer, it’s important that you get this deposit in by the agreed-upon date and that the amount is correct.
As a seller, it’s important that you make sure you have a deposit in hand before going too far into the process. Should the deal fail, the seller keeps the deposit which will usually go towards the buyer’s down payment.
Home inspections
There may be various conditions that are required to be taken care of before closing.
One such common condition is a home inspection. Home inspectors are hired by the buyer in order to ensure that the house is in the same condition as it was listed and so they can identify any issues with the home before they purchase.
If there is an issue that comes up in the inspection process, this can affect the deal. Usually, the buyer will either request a discount on the home price to cover any repairs that will be necessary, or they will request that the seller undertake the repairs themselves before the closing date. In some rare instances, the home inspection can be grounds for cancelling the deal entirely if major issues are identified.
As the seller, it now may be time to undertake any repairs or conditions that your buyer has set out. Be sure these repairs are done well and in advance of the closing date to avoid any potential legal issues.
Home appraisal
Similar to your home inspection is the home appraisal. The home appraisal is conducted on behalf of the buyer’s lender, who needs to ensure that the home is being sold for a fair market value. This protects both the lender and the buyer from overpaying. The home appraiser is usually paid by the mortgage lender, though the buyer may pay for their services in some instances.
Arrange a closing date and close the deal
Once you have everything in order, it will be time to arrange a closing date. This date will be agreed upon by both parties and is effectively the day when the ownership of the home trades hands. On the day of closing, both you and your lawyer will meet together with the other parties to sign any final paperwork and to transfer keys and any other necessary documents.
Inform your landlord
If you are a buyer who was previously renting, you should inform your landlord as early as possible that you will be moving out. This may be required in your lease agreement or may simply be a matter of courtesy.
Don’t put off packing
You should also start thinking about your plan for moving. This is something that many people leave to the last minute and it can be a major hassle. Make sure to coordinate with movers or any friends and family that are helping you, and have everything packed and ready to go on moving day.
This is especially important as the seller, as you no longer legally own the property after closing and you must have everything out before that date unless you have made arrangements with the buyer.
Pay your agents
The payment of real estate agents is usually handled by the seller. You will have agreed upon a commission with your real estate agent, and will be required to pay upon closing. This will usually be an amount of about 5% or less of your home’s purchase price, and will be divided between the buyer’s agent and seller’s agent as well as their brokers.
Final matters
There are a few final things you should make sure are in order either before or soon after your
Home insurance
Make sure you as the buyer have set up and taken out a home insurance policy effective the day of closing. This will make sure that your new purchase is fully protected and may be required by law in some areas.
Update your mailing address
You should also make sure that your new mailing address is up to date with banks, the government, and other people who may be sending you important mail. This saves you the hassle of tracking down lost mail and saves whoever lives in your old home a crowded mailbox.
Activate utilities
Finally, you should also ensure that all of your utilities are set up with the relevant municipal providers, so you can begin making payments. There may be some setup fees involved here, or you may be required to repay the seller for prepaid utilities costs.
Conclusion
If your offer has been accepted, don’t feel overwhelmed by all the things on this list. It really seems like more than it is and with the right help, everything will be easily handled and before you know it you will be moving into your new home!
Corben joined CREW as a relative newcomer to the field of real estate and has since immersed himself and learned from the experts about everything there is to know on the topic. As a writer with CREW, Corben produces informative guides that answer the questions you need to know and reports on real estate and investment news developments across Canada. Corben lives in Guelph, Ontario with his partner and their two cats. Outside of work, he loves to cook, play music, and work on all kinds of creative projects. You can contact Corben at corben@crewmedia.ca or find him on Linkedin at https://www.linkedin.com/in/corbengrant/.
