The average closing takes 60 days. Here are the steps to closing:
Step 1: Offer and Acceptance - Day 1
Both the buyer and the seller sign the National Association of Realtors Standard Form of Real Estate Contract which is a boiler plate contract. The only changes made to the contract are inclusions, exclusions, and additional contingencies. Otherwise, all other changes made by the real estate attorneys.
Step 2: Attorney Review - Approx 3-5 Days.
The attorneys effectively cancel the contract and revise it to protect their respective clients. The attorneys make changes to the contract until it is acceptable to them both. Once attorney review is concluded, the home is officially Under Contract. It is important not to let the attorney review phase drag on as the seller has the right to continue to show the house and accept offers. It is absolutely crucial that the buyer hire a good, responsive real estate attorney.
Step 3: Order Inspections - Approx 10 - 14 days.
The buyer orders the inspections. A basic home inspection should include a home and pest inspection, and radon test. Buyers may also opt for a "Level 2" fireplace inspection. A septic inspection and/or oil tank inspection may also be in order when applicable. In the event the house has well water, the seller is responsible for inspecting the well water and furnishing the water quality report to the buyer. The buyer also has the right to hire specialists (i.e. heating and cooling, roof, drainage, etc.) if he/she feels the need. Most buyers do not hire a specialist unless the home inspector expresses a concern.
Step 4 - Order Appraisal - Approx 7 days to get appraisal report.
Buyer gives their mortgage professional permission to order the appraisal. The appraiser contacts the Realtors to gain access to the property, takes measurements and photos, and creates a report. If the appraisal is less than the agreed purchase price, the buyer can: 1) ask the seller to reduce the sales price to the appraisal amount 2) split the difference 3) make up the difference 4) cancel the contract. Important Distinction: Buyers typically order the appraisal on or just before/after the inspection date. Ordering the appraisal does not mean the inspection is satisfactory and does not "lock" the buyer into the contract. Yet, its important to order the appraisal in a timely manner because they take 2-3 weeks to complete.
Step 5: Home Inspection Results - Approx 7 days from the home inspection.
After the inspectors have furnished their reports, the buyer and his/her attorney discuss any issues that need to be addressed by the seller. Home inspection items are negotiated until both parties are satisfied. If the seller is not willing to resolve material issues, the buyer has the right to cancel the contract.
Step 6 - Mortgage Commitment - Approx 30 - 45 days from the contract date.
The mortgage commitment is a contingency of the contract and due by the date specified on the contract. Usually, the mortgage commitment is due 30 - 45 days from the contract date. The seller's Realtor and attorney will ask for a copy of the mortgage commitment to make sure the buyer can close.
Step 7 - Atty Orders Title and Survey - Approx 3 weeks before closing.
The attorney orders the title and survey on the buyer's behalf. The fees are included in the closing costs. The title search and insurance could cost $3,000+. The attorney usually orders Title but the consumer has the right to do so. The survey can cost $600-$1,000 depending if the property is staked with flags.
Step 8 - Clear to close - 3 days before closing.
The mortgage company needs to issue "clear to close" in order to fund the loan.
Step 9 - Home Owners Insurance and Utility Company Transfer - 3 days before closing.
Order home owners insurance and transfer the utilities into your name.
Disclaimer: These are not only and all steps to closing on a home....just a guideline. Please refer to the contract, attorney review letters and the advice from your attorney.
Let me know if you have any questions