If you are planning to become a first-time home buyer, the following information about what occurs during a real estate closing will keep you in-the-know.
- When you are ready to make an offer on a home, it is good to make an offer that is 10% less than the asking price. This will give you plenty of room to negotiate with the seller.
- When you make a formal offer, you normally must pay 1% of the sale price as “earnest money”. This lets the seller know that you are serious about your offer.
- You will have contingencies, such as getting proof of proper financing and a good house inspection.
- You will hire a home inspector that will give the home a complete inspection, to catch any possible problems the home may have.
- When your offer is accepted by the seller, a legal and binding contract is drawn which states sell price, details of buyer’s or seller’s obligations, and date of possession.
- The required HUD “settlement sheet” provides a list of all monies paid at closing, including commissions, taxes and escrow amounts.
- There will be a mandatory title search, and title insurance and an application for homeowners insurance is required.
- Various closing costs will be paid such as the appraisal fee, the credit report fee, your taxes and the document preparation fee, to name a few.
- Utility service and mortgage payment transfers will be arranged.