If you’re reading this because you’re about to enter the closing process of a piece of Florida real estate you’ve been wanting to buy or sell: congratulations! This is a big moment and it’s important to understand the next steps which will wrap everything up for everyone involved.
The closing process is the final chance for all parties involved to dot their t’s and cross their i’s, so before you throw on “Closing Time” by R.E.M., make sure you understand these next steps.
Final negotiations
You’ve likely already come to terms with the other party at this point, but everyone will now be reviewing a TON of paperwork. This will essentially be the final chance to review any fine details and make sure the paperwork reflects the actual agreement.
You should work closely with your attorney to review the legality of all the terms laid out in the agreement. Sometimes one party will have their attorney tweak certain terms and conditions in their favor. This is bad-faith negotiating and we don’t want to assume anyone is doing so, but it’s best to be safe.
Proper title search
This is something we covered in last month’s blog To avoid rehashing the entire blog, a proper title search can briefly be described as the process of verifying the person who claims ownership of the property actually owns the property. This will clear out any other claims of ownership on the property along with potential boundary disputes.
Earnest money payment
After the property owner is confirmed and the contract is executed, the payments begin. The first payment will be “earnest money” which is a down payment on the home that shows you’re serious about finalizing the purchase during the closing process. Buyers generally can’t refund this money if something goes wrong in the closing process, so it’s a risk but could also be the difference in securing a property or losing to another bidder.
This money will be placed in an escrow account, normally put in place by the seller’s attorney to be securely deposited on their behalf.
Property appraisal, inspection, and survey
During the appraisal process, a professional selected by the mortgage lender will come in and give an official valuation of what the property is worth. This part is key because if the appraisal comes in significantly lower than what the asking price or offer is, it could mean lenders won’t approve a mortgage worth the total value of the home. This could mean securing additional financial backing or completely flipping the process on its head. It also protects buyers from getting scammed by massive asking prices and sellers from giving up property at a value far lower than it’s worth.
The inspection will be done by the buyer and will be accompanied by a professional who understands architecture and electrical wiring. The home inspector is required by Florida law to give a written opinion on the inspection. This inspection could expose hidden defects with the property which could result in renegotiation or even abandonment of the sale entirely.
The property survey ensures the property is up to code and is an important part of the process to avoid issues in a future proper title search which we mentioned above. This process verifies the property boundaries are as claimed and avoids any potential violations of state and local ordinances.
The timing of each of these steps will vary depending on the individual circumstances.
Securing a mortgage
You may have gotten a pre-approval letter earlier in the process, but this is where you will officially commit to a mortgage loan. We hear from a lot of buyers who believe this should happen earlier in the process, but you can actually wait to this portion to even apply for one.
Applying for a mortgage could actually hurt your credit, so if you’re sure you’re going to be approved and are looking for a home it’s likely best not to apply for a loan for every single home you view. The timing depends on preference. Some sellers may want a pre-approval letter ahead of time to ensure a buyer is serious and financially capable of the commitment.
Transfer of the property
After all of these steps are complete, the proper insurance is obtained, and the necessary funds are transferred, it’s time to hand over the keys! You can pat yourself on the back for getting through the exhausting process which normally takes a few weeks.
You should never leave your attorney out of any part of this process. At the Law Offices of Ray Garcia, we have the experience to handle the closing process and give you peace of mind during what is sure to be a stressful time. Contact us today and make reach your real estate goals!
Law Office of Ray Garcia, P.A.
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