Purchasing real estate is a significant milestone and likely the largest transaction you will make. As such, it does not come as a surprise that the days leading up to the closing are often overwhelming. Those going through the process need to use this time to review multiple legal documents, make sure they have everything prepared for the final financial transaction, and do a walkthrough of the property to make sure everything is in order. Thankfully, there are steps you can take to mitigate the risk of surprises after the transaction is complete and better ensure you are prepared for the closing.
Step #1: Understand the closing process
Before closing, familiarize yourself with the process. Closing involves signing legal documents, transferring funds, and finalizing the property transfer. In many cases it is possible to request the documents prior to the closing date. This can provide an opportunity to review and make changes as needed before the closing, reducing the risk of stressful surprises during that last meeting.
Step #2: Review all documents thoroughly
When reviewing the documents noted above, play close attention to the following:
- Purchase agreement: Verify terms and conditions match your understanding. Check for contingencies and deadlines.
- Title report: Confirm clear title and absence of liens or encumbrances. Address any discrepancies immediately.
- Closing disclosure: Compare with loan estimate. Ensure fees and charges align with expectations.
A thorough review of these documents protects your interests and prevents post-closing surprises.
Step #3: Secure financing and funds
It is helpful to double-check loan terms and conditions before the final closing date. This also provides an opportunity to touch base with the lender and make sure they have all necessary documentation.
Next, prepare for the transfer of funds at the closing. You can do this by either arranging for a wire transfer or cashier’s check. Verify payment instructions with closing agent. This is especially important if using a wire transfer as scams are not uncommon.
Step #4: Conduct a final walkthrough
Perform a final walkthrough of the property before closing. Use this as an opportunity to verify the condition of the property matches expectations and that any agreed-upon repairs are complete. Check the property for damage or changes since your last visit and ensure appliances and systems function properly. Document any outstanding issues.
Closing on a real estate purchase requires careful preparation and attention to detail. By taking these steps, you mitigate risks and protect your interests.