From Contract to Closing, What Do Sellers Need to Know?
Education, How-To, November Roundup
When it comes to selling your home, having a buyer sign the contract is an important step, maybe the most important — but there are still many moving pieces that need to be accounted for.
The period from contract to closing is thought of as the time when sellers and their real estate teams “seal the deal” with the buyer. After contract acceptance, buyers and sellers will need to come together to work through the attorney review process (including establishing clear title on the property and resolving contract questions and disputes), having an inspection performed, securing financing, and more.
For sellers, here are seven important steps to consider as you prepare to head from contract to closing:
1.) Assemble Your Real Estate Team
Once your home is under contract, it will be important to bring a real estate attorney on as part of your team. After the contract is drawn up, your attorney will be involved with:
Performing a title search and ordering title insuranceThis process confirms that you, the seller, have a clear title on the home. Title insurance protects the buyer against possible liens, improper or falsified documentation, and other risks associated with property ownership. In Illinois, it is the seller’s obligation to provide this insurance to the buyer.
Ordering a plat of survey for single family homes or fee simple townhomesThis is paperwork that illustrates lot size, boundaries, nearby streets, and other relevant information about a property.
Calculating a closing statement
Helping to schedule closing meetings, along with your listing agent
Assisting with negotiation of inspection findings and proration of taxes
Your broker may be able to refer the services of a trusted attorney. Baird & Warner makes it even easier, offering a full-service, integrated approach thanks to Baird & Warner Title Services.
One of the top two title companies in Illinois, Baird & Warner Title Services is a network of more than 1000 attorneys specializing in real estate, who have been vetted to make sure they bring the most knowledge and local expertise to the closing table. Baird & Warner Title Services can help sellers find competitive rates on title insurance, and offer the convenience of 30 closing offices all around Chicagoland.
Research shows that consumers want the efficiency, accountability, convenience, and continuity of service that comes with keeping the whole real estate process under one roof. With Baird & Warner, sellers can count on having a trusted team that works together seamlessly to make the final steps of selling a home easier.
2.) Contact Your Condo Association
In Chicagoland, many homes being bought and sold are condominiums and belong to a condo association. If this is the case for your home, an important next step is to get in contact with your condo association, board, or management company. The leadership for your condo association will be responsible for taking a number of steps, including issuing a “home under contract” notice and furnishing the buyer with condominium documents, such as by-laws, recent meeting minutes, declarations, and a 22.1 disclosure survey. Your listing agent or attorney can help you ask the right questions to ensure you get the documentation you require.
3.) Your Listing Agent Keeps the Process Moving
Once your home has gone under contact, your listing agent will take on an important oversight role, keeping in close contact with the buyer’s representation to make sure that many critical steps are taken.
Along with the contract signing comes the the initial earnest money deposit. This is a “good faith” payment, due at contract signing, which demonstrates the buyer’s commitment to purchasing your home. Earnest money is typically paid in two installments. An “initial” deposit of earnest money comes first and typically consists of roughly $1,000. A second installment, the “balance of earnest money,” typically comes after the attorney review period and accounts for a portion of the buyer’s down payment.
Shortly after the contract is signed, buyers will also bring in inspectors to assess the property. Your listing agent will often be an important point of contact and help coordinate the scheduling of the inspection and other key details.
4.) Review Contract Changes
A short time after going under contract, your attorney and listing agent will come to you to discuss the progress of the attorney review period.
Following the results of the inspection and the title search, your real estate team will be in close communication with the buyer and their team. At this point, it may be important to make some negotiation decisions, including responding to proposed contract changes (things like timing and tax proration), inspection remedy requests, and other contract language requests from the buyer’s attorney.
At this point, the buyer also typically submits the balance of earnest money. The exact amount will vary from sale to sale, but typically ranges from between 3 to 10% of the contract price in Chicagoland transactions.
5.) The Buyer’s Lender Performs an Appraisal
Around this time, the buyer’s mortgage lender will send an appraiser, who will reach out to your listing agent to schedule a time to survey the house.
The appraisal is generally a brief (20-30 minute) appointment, and you, the seller, do not need to be present. The purpose of the appraisal is to reassure the buyer’s mortgage lender that the home’s value is equivalent to, or in excess of, the contract amount against which they’re lending.
For buyers, this is a very important part of the process, and it could impact the timeline for sellers.
At this time, sellers will need to wait for the results of the appraisal to be returned. If the appraisal shows that the home is of sufficient value, then the mortgage lender will issue its commitment notice, also known as a “clear-to-close.” If the appraisal does not affirm the home’s value, it may take longer to get to closing. At this point, the buyer may attempt to negotiate a lower price. In other cases, sellers will have to wait until the buyer can secure a new type of loan or work out an agreement with their mortgage lender.
6.) Get Ready to Move
With all of the excitement of moving from contract to closing, it can be easy for sellers to overlook everything that goes into moving out of their current home.
During this time, sellers may wish to focus on decluttering and getting rid of household items they no longer want or need, while also packing and moving the rest of their belongings. If there is professional staging furniture or art in the home, it’s also important that you or your agent contact the staging company prior to closing, so that they can take action.
Similarly, it’s important to notify all relevant utility companies — including your electricity, gas, and cable/internet providers — that you’re moving, so that they can cancel your service, or transfer it to your new address.
7.) Your Team Finalizes the Last Minute Details & Goes to Closing
Finally, it’s time for the big event: closing.
Once the buyer is cleared by their mortgage lender and all contract negotiations and remedies are completed, you, your attorney, and your listing agent will finalize some important details, including the date, time, and location of closing, as well as determining the final estimate of financial figures, including closing costs and cash flow.
From there, it’s time for the handover. In many cases, your attorneys may have you pre-sign paperwork, or else provide them with power of attorney to sign documents on your behalf at the closing table. Your real estate team will oversee everything at the closing table, to make sure the sale makes it across the finish line as smoothly and efficiently as possible.
We’ve been helping clients sell and buy homes in Chicagoland for more than 160 years. Our full-service approach, including in-house title services, helps turn a complex process into one that’s easier, at every step of the way.
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