The Closing Process - From Offer to Escrow

Closing on your Redlands area home sale is an exciting time. Once a buyer has put an offer on your home, you’re ready to negotiate the contract on the sale of the property. As your Inland Empire expert realtors, we will coordinate all activities and update all parties on the process.

The Purchase Agreement
The Purchase Agreement is a written document in which the purchaser agrees to buy certain real estate and the seller agrees to sell under stated terms and conditions. It can also be called a sales contract, earnest money contract or agreement for sale.

Here are the steps in the closing process – from the negotiations to the signing of the final document.

1. The negotiations begin once an offer has been presented. It continues until it an offer has been accepted and agreed to by both parties. It remains in the negotiations stage unless one rejects the offer or counteroffer outright.
2. Buyer’s home inspection. A buyer typically accompanies a home inspector to the inspection. Allow approximately two to three hours for the inspection.
3. Negotiation or make necessary repairs. If repairs are called for, we will work together to negotiate repairs noted during the inspection.
4. Buyer’s walk through. If a buyer’s walk-through is in the contract, we will schedule this. The property must be in the same condition or better than it was when the agreement to the sale was made.

What is Escrow?
Escrow means “neutral protection” for all parties involved in the transaction – the seller, the lender and the buyer. So that all parties involved in the transfer of real property are protected, an impartial third party services them. This neutral third party acts as an intermediary between the buyer and seller, and also collects and remits funds as instructed. Buyer’s funds are deposited with the escrow company that then remits to the seller on the buyer’s behalf.

Banks and title companies, as well as independent escrow firms that are licensed by the state of California, perform escrows in California. When considering an escrow company, look for one that clearly defines its services and lists all fees and charges “up front.” We will recommend escrow companies that we’ve worked with for many years.

Tell Me about the Inspection Process

The Physical Inspection clause in your Purchase Agreement, when initialed by both parties, allows the right to have the property thoroughly inspected. This is usually done through a General Home Inspection. The inspection and the resulting report provide an overall assessment of the present condition of the property.

The Home Inspection covers items such as exterior siding, paint, flooring, appliances, water heater, furnace, electrical service, plumbing and other visible features of the property. This is a general inspection and will often call for additional inspections by specific trades, such as roof and furnace inspections.

If conditions warrant, the Home Inspector may recommend a Structural Engineers Report. Such a report would identify structural failures and detail recommended corrections.

Often referred to as a “Termite Report,” the Structural Pest Control Inspection is conducted by a licensed inspector. In addition to actual termite damage, the Pest Report will indicate any type of wood destroying organisms that may be present, including Fungi (sometimes called “dry rot”), which generally results from excessive moisture.

The Purchase Agreement will specify who is responsible for the cost of the inspection and making these corrections. This is a negotiable item and should be considered carefully.

What Will My Agent Be Doing During This Whole Process?
Believe us; we’re going to be busy handling all the details during the process in order to keep you in the loop so that you will enjoy a smooth closing.

We will do the following (as applicable):

• Receive and review all Offer to Purchase contracts submitted by buyers or buyers’ agents.
• Evaluate offer(s) and prepare a “net sheet” on each for the owner for comparison purposes
• Counsel seller on offers. Explain merits and weakness of each component of each offer
• Contact buyers’ agents to review buyer’s qualifications and discuss offer
• Fax/deliver Seller’s Disclosure to buyer’s agent or buyer upon request and prior to offer if possible
• Confirm buyer is pre-qualified by calling Loan Officer
• Obtain pre-qualification letter on buyer from Loan Officer
• Negotiate all offers on seller’s behalf, setting time limit for loan approval and closing date
• Prepare and convey any counteroffers, acceptance or amendments to buyer’s agent
• Fax copies of contract and all addendums to closing attorney or title company
• When Offer to Purchase Contract is accepted and signed by seller, deliver to buyer’s agent
• Record and promptly deposit buyer’s earnest money in escrow account.
• Disseminate “Under-Contract Showing Restrictions” as seller requests
• Deliver copies of fully signed Offer to Purchase contract to seller
• Fax/deliver copies of Offer to Purchase contract to Selling Agent
• Fax copies of Offer to Purchase contract to lender
• Provide copies of signed Offer to Purchase contract for office file
• Advise seller in handling additional offers to purchase submitted between contract and closing
• Change status in MLS to “Sale Pending”
• Update transaction management program to show “Sale Pending”
• Review buyer’s credit report results — Advise seller of worst and best case scenarios
• Provide credit report information to seller if property will be seller-financed
• Assist buyer with obtaining financing, if applicable and follow-up as necessary
• Coordinate with lender on discount points being locked in with dates
• Deliver unrecorded property information to buyer
• Order septic system inspection, if applicable
• Receive and review septic system report and assess any possible impact on sale
• Deliver copy of septic system inspection report lender & buyer
• Deliver Well Flow Test Report copies to lender & buyer and property listing file
• Verify termite inspection ordered
• Verify mold inspection ordered, if required

Tracking the Loan Process

• Confirm Verifications Of Deposit & buyer’s employment have been returned
• Follow loan processing through to the underwriter
• Add lender and other vendors to transaction management program so agents, buyer and seller can track progress of sale
• Contact lender weekly to ensure processing is on track
• Relay final approval of buyer’s loan application to seller

Home Inspection

• Coordinate buyer’s professional home inspection with seller
• Review home inspector’s report
• Enter completion into transaction management tracking software program
• Explain seller’s responsibilities with respect to loan limits and interpret any clauses in the contract
• Ensure seller’s compliance with Home Inspection Clause requirements
• Recommend or assist seller with identifying and negotiating with trustworthy contractors to perform any required repairs
• Negotiate payment and oversee completion of all required repairs on seller’s behalf, if needed

• Schedule appraisal
• Provide comparable sales used in market pricing to Appraiser
• Follow-up on appraisal
• Enter completion into transaction management program
• Assist seller in questioning appraisal report if it seems too low

• Ensure contract is signed by all parties
• Coordinate closing process with buyer’s agent and lender
• Update closing forms & files
• Ensure all parties have all forms and information needed to close the sale
• Select location where closing will be held
• Confirm closing date and time and notify all parties
• Assist in solving any title problems (boundary disputes, easements, etc) or in obtaining death certificates
• Work with buyer’s agent in scheduling and conducting buyer’s Final Walk-Thru prior to closing
• Research all tax, HOA, utility and other applicable prorations
• Request final closing figures from closing agent (attorney or title company)
• Receive & carefully review closing figures to ensure accuracy of preparation
• Forward verified closing figures to buyer’s agent
• Request copy of closing documents from closing agent
• Confirm buyer and buyer’s agent have received title insurance commitment
• Provide “Home Owners Warranty” for availability at closing
• Review all closing documents carefully for errors
• Forward closing documents to absentee seller as requested
• Review documents with closing agent (attorney)
• Provide earnest money deposit check from escrow account to closing agent
• Coordinate this closing with seller’s next purchase and resolve any timing problems
• Have a “no surprises” closing so that seller receives a net proceeds check at closing
• Refer sellers to one of the best agents at their destination, if applicable
• Change MLS status to Sold. Enter sale date, price, selling broker and agent’s ID numbers, etc.
• Close out listing in transaction management program

Follow Up After Closing

• Answer questions about filing claims with Home Owner Warranty company if requested
• Attempt to clarify and resolve any conflicts about repairs if buyer is not satisfied
• Respond to any follow-on calls and provide any additional information required from office files.
• Handling every detail and coordinating the process on your behalf, you will be able to encounter less stress and even enjoy the experience.
• You may be wondering how much money you’ll net from the sale of your Redlands home. Provided below is a worksheet to help you arrive at that figure. Just add up your closing costs and subtract them from the sale price of your home. The result is your net proceeds.

Congratulations on the sale of your home!

What You’ll Net at Closing

Now that you have read this article, why not contact us and we will schedule an appointment to place your Redlands area home on the market.