Closing Process

15 Replies

Newbie here, trying to get this closing process down. Where do you meet to do a closing, is it at the title agency, a courthouse that all 3 parties meet? What exactly do the title person do at the closing? What exactly take place from time of arrival until the money has been collect? How do I, as well as the seller of the house get paid, is it like, the owner hands me the cash, I take my cut and then give the seller their cut?

Can someone please paint this picture.

Thanks

Depending on the laws/customs of the state, you'll either close at a title company office or an attorney office.  It's the title officer or attorney who is responsible for coordinating everything, collecting money, disbursing money, filing documents, etc.

Generally speaking, the buyer either wires the funds to the title company or attorney before the closing, shows up, gives the title officer/attorney a copy of his license, signs a bunch of papers (if there's a loan involved then it's a LOT of papers) and then gets the keys from the title officer/attorney.

At the same time (not always, but generally), the seller shows up, gives the title officer/attorney their license (to make a copy), signs a few pieces of paper, hands over the keys and then gets a check from the title officer/attorney for their proceeds.

When the closing is completed, the title company or attorney still has a bunch of money left over for things like real estate commissions, taxes, utility payoffs, loan payoffs, etc.  The title company will disburse this money as necessary to ensure everything is paid off correctly and then they'll file the deed with the local recorder.

That's the very high-level answer...

You need to just find a good title company or closing attorney.  They basically handle the transaction and walk you through the closing process if you get a good one.  You should get one that is deals with investors and not someone that does mostly traditional transactions.  They won't be useful to walking you through getting your deal done if they don't have experience.  I never do closing at courthouses unless I am buying something at a foreclosure auction and even then I have my title company finalize the deal.

Thanks, @J Scott  so how many days do I allow for so that the buyer can wire the money? What's general practice once the buyer has given me a deposit and signed the contract?

@Rod Haugabrooks  how do you find an investor friendly title company by the way? Do I use google or do I call the court house, tax accessor, or is there another method?

Thanks

Originally posted by @Marshae Hannor:

Thanks, @J Scott  so how many days do I allow for so that the buyer can wire the money? What's general practice once the buyer has given me a deposit and signed the contract?

 There's a lot that happens before the closing occurs, and the process is generally at least a week and often several weeks.

The title company can tell you when they need the funds wired or whether they can be brought to the closing as certified funds.  Of course, if your contract stipulates that the funds are provided earlier than the closing, then the buyer should wire funds based on whatever schedule is laid out in the contract.

@Marshae Hannor if you are real estate investing or wholesaling then you are working in a niche field. You probably will have to network with other investors in your area and find out who deals with investors and wholesalers.  Possibly you could find it by doing a google search.  In my market I found mine by going to the local real estate investors club meeting.  Possibly even posting on this forum and asking your fellow CT investors to refer you.  Most people will be happy to refer them to you.

@Rod Haugabrooks  thanks, def taking your advice and asking on this website. @J Scott you just opened the door for more questions, I hope you don't mind, on the contract that I have between myself and the buyer, there is a place where the date goes for the day of settlement, how would I know what to put there? This is the example on my contract:

Closing will take place on or before _______________. Time being of the essence, at a time and place designated by Buyer. Buyer shall choose the escrow, title and/or closing agent.

Do I estimate this? 

Originally posted by @Marshae Hannor:

...on the contract that I have between myself and the buyer, there is a place where the date goes for the day of settlement, how would I know what to put there?

If you're wholesaling the property, the date you agree to with your buyer should be the same as the date on the contract between you and the seller.  And that will depend on a lot of things, such as how long the title company needs, how long the seller wants and how long you think you need.

Ok, after I sign with the seller and go to the agency to check the property, Ill ask then. thanks a million @J Scott 

@Marshae Hannor you gotta coordinate all that with your closing agent.  In my area we can get a title search back in 3-5 days.  I can generally get a closing done in 5-7 days.  But the closing date all depends on the transaction.  If it's a clean cash deal it can close in week.  If you are dealing with a lender it could take 45 days.  If it's a short sale it could be 6 months.  There isn't a simple answer it depends on the deal and every deal is different.  You need to quickly find a closing agent and have them walk you through the timeline of getting the deal closed.  You can write a contract stating the closing date is tomorrow but if the closing agent isn't ready then nothing is going to happen.  

On top of that every state and local municipality is different so me trying to advise you from Florida or J Scott trying to advise you from Maryland may not even be relevant to your situation.  

You can set date of closing in a month to give yourself time and try to close quicker. If you have good buyers it should happen as soon as title is ready. BP is terrific forum to ask these questions but I would also suggest taking your Purchase Agreement and earnest money to title and ask them to walk you through the process.

Hi, @Marshae Hannor - welcome to BP. I'm in SECT, too! We're practically neighbors.

Can you clarify a bit more about what it is you're doing? Are you wholesaling/acting as a middleman, selling your own property directly to a buyer, etc? Where did you get your Purchase and Sale Contract?

In CT, you will use an attorney to close and they will handle title search/title insurance, as well as other duties, including handling monies that are exchanged during the actual purchase/sale. They essentially serve as an escrow agent as well - though, as a bit of a side note, if you are using a real estate agent, the agent will probably have collected and then deposited the earnest money deposit into an escrow account held by their broker. The agent/broker can guide you on how that works and where and when that deposit check comes into play. It varies by county, i.e. by real estate boards (ex: my mother is a broker in Litchfield County and that board handles deposits differently than they do here in New London County. It's really just semantics as to whether the broker turns the check back over at closing or deposits it.).

The buyer can wire money to the attorney or will bring a certified check to the closing (we've done both). The attorney can help walk you through the steps; actually, the paralegal in the attorney's office will most likely be the one walking you through it and handling the paperwork.

As others have stated, the closing date can vary. If it's a cash transaction and the attorney's office isn't booked and can do the title search quickly, you can conceivably close in a matter of days (though I wouldn't try for anything less than 5 business days). If the buyer is using a lender, whether traditional, hard money, private, then you'll have some more paperwork and waiting times.

I'm a newbie also although I've been at this for about 4 months. I had the same darn questions when i first started. It was suggested to me that I start building my power team of professionals to handle different aspects of REI. It was also suggested that I attend a few of the local REIA meetings in my area which I did. This is a must for any Newbie. You will find a lot of your team members at these meetings that will be willing to help you but you have to open your mouth and let them know. They'll know anyways by the questions and answers you give the,. Anyway, network with as many people as you can to expand your earning potential, prospects, buyers, sellers, etc. Getting a Mentor is vitally important if you are to avoid investor mistakes. These people on your team can guide you through the transaction process. You're on the right track! "I wanna know how I get paid too!"

Oh wow you guys, thanks for the feedback, @Karin DiMauro  I am doing wholesaling, I thought I mentioned it, but did not, my apologies. I'm going to be working in Bridgeport for starters, once I understand the closing and develop my marketing plan. I'll reach out to investors in the area today to get more information concerning the lawyer.

@D'Mark Poole  I plan on attending a few, so thanks for reconfirming that I need to do that. Yall are beyond awesome!

That's good. Get your team together. You're going to need them in the areas you lack. Eventually you'll have a well oiled machine once it's put together. You may have to change a person here and there, depending on performance, but the parts are still the same.

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