home closing processCongratulations on receiving an offer on the sale of your home! It’s not time to celebrate just yet, though. Before you can call the deal done, you’ve got to go through a closing process. The closing process can be broken down into three categories. First, there are disclosures, inspections, and title. Next, is the mortgage process, and finally is the actual closing of the sale when the buyer gets the keys. Each phase of the closing has several attributes, but here is a general overview of the home closing process in Michigan.

Part One: Disclosures, Inspection, and Title:

In this phase, there are several opportunities for a buyer to back out, so you want to dot your I’s and cross your T’s (and your fingers) during this portion of the sale. Once an offer is made and you’ve accepted, the contract is signed and a good faith deposit is made to the buyer’s attorney, broker, or escrow agent, but not to you, the seller, directly. The signed contract is sent to a lawyer or Title Company to make sure the title is clear so the transfer and changing of title can take place. Preparing the title commitment often is an expense to the seller. Michigan requires most sellers to provide a “clear title” as well as insurance, usually within seven days of the contract’s signing. If anything is wrong with the title, buyers have the right to back out.

Next, the buyer reviews and signs off on any disclosures such as environmental hazards, flaws with the property, prior repairs, etc., which may vary based on property type. A Seller Disclosure Statement is required by Michigan law to be provided by the seller as a supplement to the contract. Both parties must sign this form within 72 hours of receipt. If the disclosure is not provided within those time constraints, the buyer can again opt out of the agreement. Inspections are then performed on the property at the buyer’s expense. Any inspections must be performed by a certain date, indicated in the contract as inspection contingency date. Based on the outcomes of the inspections, buyers may opt out of the contract or negotiate for repairs or closing cost credits by giving the seller notice in writing before the inspection contingency date. Sellers can agree, counter-offer, or decline to make amends. Check your specific contract for these practices and policies.

Part Two: The Mortgage Process

During this portion, often taking place simultaneously with the disclosures, inspection, and title, the buyer submits a loan application. Within three days, the lender sends an estimate, which is a breakdown of estimated closing costs, which may vary from the final costs. Once the lender approves the loan, a loan commitment letter is issued stating its willingness to provide the loan under certain conditions, including but not limited to appraisal of the property.  If the appraisal comes back lower than the asking price, the buyer has the right to back out of the contract without penalty by providing written notice. Once the appraisal is complete, the buyer removes the loan contingency from the contract. Again, check your specific contract for appraisal contingency clauses.

Part Three: Closing the Sale

During the closing, the buyer brings a cashier check to cover mortgage closing costs, taxes, and utilities that the seller has paid to date. The buyer has the right to a final walk-through to inspect the home to make sure it’s in the same condition it was at the time of the offer. Both parties, in full agreement, sign all documents. A representative from the Title Company, or attorney then records the transaction, and a deed issued. Finally, the buyer receives the keys and takes ownership of the property.

The closing process has several phases and may be costly in both time and money -and includes opportunities for your buyer to back out of your contract. . Your real estate agent should carefully and compassionately guide you through each phase of the closing process on your home. Finally, you’ll be able to turn the keys to this house over to a new owner and be free to pursue your other real estate endeavors, like moving into your new home!

For more information on the home closing process, buying a house, or selling a house give us a call. You can reach us at 586-979-5475.

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