The days and weeks in between the contract signing and the closing as specified in the contract is referred to as the “escrow period.” It usually lasts anywhere from 30 and 60 days but can be less if the buyer pays all cash for the property.

During this time, the home buyer will be quite busy with any contingencies the buyer placed into the contract. In addition, the buyer will need to secure title insurance and homeowners’ insurance.

If you are the home seller, you will need to allow access to the property for inspections, dealing with any liens that the title search turns up and getting ready to move all your personal property on time. Also, if you added any contingencies to the contract, such as that the contract will be canceled if you cannot find a home to purchase and move to within a certain time, you will need to take action per the agreed-upon terms.

The other professionals involved in the transaction will also be busy. The buyer’s mortgage lender, for example, will likely order an appraisal of the property, and perform its final review of the loan in preparation for approval and issuance.


What Is the Closing?

Closing a real estate sale is similar to closing the escrow. It simply means that the deal is completed and both parties have come to an agreement as to the selling price of the home and conditions of the sale.

Most likely, the sales contract contains a closing date, which is when the final papers are signed and is the date the buyer becomes the owner of the home. For the closing to precede, all issues regarding matters such as financing and insurance will need to have already been resolved.

This does not necessarily mean that the buyer can you move into the house on the closing date. The sales contract should state when the seller is to move out and the buyer is to take possession of the property. In most cases, the buyer takes possession at closing, but the parties can also negotiate alternative conditions, such as the seller remaining in the home for a period of time. This is typically the case if the seller is waiting to close on another home purchase or complete the construction of a new home.

Protections for the buyer may also be reflected in an escrow arrangement, such as money being held in escrow to be paid to the buyer if the seller remains in the home longer than agreed.


How Long Does It Really Take To Close On A Home?

The closing period can take as little as three days to close some real estate deals, while others may take more than 60 days. To that end, there are many factors that play into how fast you can close on a home. One of the biggest is whether or not you are using financing, and what type. It might be possible to use a hard money lender and close in a few days, while conventional lenders may be backed up for weeks. Keep in mind that cash usually equals speed, especially when closing in real estate.


12 Steps to Closing a Real Estate Deal


1. Open Escrow Account and Deposit Escrow Funds

As much of a practice in exercising caution as it is in facilitating a deal, opening an escrow account is a step in closing real estate deals that cannot be overlooked. An escrow account is held by a third party on behalf of the buyer and seller. A home sale involves multiple steps taken over a span of weeks. Prior to bringing your deal to the closing table, be sure to establish an escrow account that will handle things moving forward.

If the buyer is offering an escrow deposit or earnest money deposit as a part of the contract, the buyer is required to deposit the funds by cashier’s check or wire them into an escrow account within the specified period of time as stated in the contract, typically 48 to 72 hours from when the contract was executed.

The escrow agent will send confirmation to both parties once the escrow funds are deposited.


2. Conduct a Title Search & Get Insurance

Not unlike the previous step, conducting a title search and obtaining title insurance represents a safety measure; you can never be too safe when closing a real estate deal. That said, this step is to protect your asset from anyone else claiming ownership.

The Title Company or closing attorney will order a title search to obtain title insurance. This step is to ensure that there are no liens, encumbrances, or title defects that would prohibit the transfer of ownership from one party to the next. If there are any issues such as open violations, unpaid taxes, or other defects, they will need to be addressed prior to closing or paid at closing.


3. Hire an Attorney

While optional, hiring an attorney to represent you in a real estate deal is a luxury few should do without. If for nothing else, hiring an attorney that specializes in real estate transactions will provide you with a peace of mind that cannot be underestimated. Real estate is filled with complicated jargon that can be difficult to understand and your closing documents should be completely understood.

In some states and counties, you may be required to hire an attorney to handle the closing. Check your local laws before proceeding without an attorney if that is your wish.


4. Conduct Inspections

Most contracts have an optional inspection period, which is generally 14 days. This is the period of time the buyer has to inspect the property and exit the contract without losing their earnest deposit or request or renegotiate any terms, repairs, or concessions.

It is suggested the buyer or the real estate agent representing the buyer order the proper inspections immediately after the earnest deposit has been received in order to stay within the limit of the inspection period. Property inspections can include:

  • Pest inspection.
  • Home inspection.
  • Property survey (optional).


5. Negotiate Closing Costs

From opening an escrow account to hiring a real estate attorney, all involved services will have a fee attached. These fees can really start to add up if you are not careful.

Also look out for junk fees. Junk fees are charges that a lender imposes at the closing of a mortgage, which are often unexpected by the borrower and not clearly explained by the lender. These fees can add up to a big bill. Junk fees include administrative fees, application review fees, appraisal review fees, ancillary fees, processing fees and settlement fees. If you’re willing to speak up and stand your ground, you can usually get junk fees and other charges reduced or eliminated before you go to closing.

Common Real Estate Closing Costs

Closing on a real estate deal will come complete with several additional costs. However, instead of simply lumping them all under one umbrella, let’s take a look at many of the closing costs one could expect to run into at a real estate closing:

  • Mortgage Origination Fees
  • Discount Points
  • Appraisal Fees
  • Title Insurance
  • Real Estate Agent Fees
  • Prepaid Costs
  • Private Mortgage Insurance (PMI)
  • Recording Fees & Taxes
  • Miscellaneous Costs


6. Renegotiate the Offer

Even when your purchase offer has already been accepted, you may want to renegotiate the price to reflect the cost of any necessary repairs revealed by inspections. You could also keep the purchase price the same, but try to get the seller to pay for repairs. Even if you are purchasing the property “as is,” there is no harm in asking. You can also still back out without penalty if a major problem is found that the seller cannot or will not fix.


7. Lock in Your Interest Rate

Interest rates, including those offered on the mortgage, can be volatile and subject to change. Rates are subject to multiple factors, such as geographic region, property type, type of loan applied for, and the applicant’s credit score.

If at all possible, it is advisable to lock in the interest rate for the loan in advance. That prevents you from being at the mercy of market fluctuations, which could cause rates to rise before you finalize your property purchase. Even a 0.25% rate hike can significantly increase your monthly payments and the amount of time it takes to repay the mortgage.


8. Remove Contingencies

Every good real estate investor knows a great offer is not complete without contingencies; the clauses in a contract that allow you to back out of a deal in the event something goes awry. It’s also worth noting that any contingencies should have been taken care of by this point. While that’s fine and well, most contingencies need to be written off when they are met. In other words, you must remove the contingencies (in writing) by a certain date, which is typically identified in the purchase offer.


9. Final Walk-Through

One of the last steps before you sign your closing papers should be to look over the property one last time. You want to make sure that no damage has occurred since your last home inspection and that the property is in the condition you were promised. You should also verify that the seller has completed the required fixes and no new problems came up. Finally, check to see that nothing included in the purchase agreement was removed.


10. Sign the Papers

It should go without saying, but the most important step in closing real estate deals is signing the appropriate paperwork. Once everything is in place, feel free to start signing away. But although you may feel pressured by the people who are waiting for you to sign your papers—such as the notary or the mortgage lender—be sure to read each page carefully, as the fine print can have a major impact for years to come.

In particular, make sure the interest rate is correct and all other agreed terms are clearly mentioned. More generally, compare your closing costs to the good faith estimate you received at the beginning of the process. Vigorously dispute any fees you think are illegitimate.

If you don’t understand something, consult a real estate attorney. Your agent will also be helpful in making sense of any complex legal language.


What Happens at Citrus Heritage Escrow?

During the escrow period, our title department begins researching and examining all historical records pertaining to the subject property. Barring any unusual circumstances, a commitment for title insurance is issued, indicating a clear title or listing any items which must be cleared prior to closing. The commitment is sent to you for review.

Your escrow officer follows instructions on your contract, coordinates deadlines, and gathers all necessary paperwork. For example, written requests for payoff information (called “demands”) are sent to the Seller’s mortgage company and any other lien holders.

When choosing an escrow company there can be many important factors to evaluate. Fees, location, staff and even recommendations from friends and colleagues are all things to consider. With Citrus Heritage Escrow by your side, you can rest assured that when you receive your settlement check, you’ve gained the maximum benefit from your home sale or purchase.


Call us today with any questions or concerns. Our professional Escrow Agents will help you through this exciting yet confusing process. (951) 335-7200