Closing process

2 Replies

I was wondering if someone could go through and explain the entire closing process when buying a house. For instance, who is involved? What role does a title company play? What exactly is escrow, and earnest money? From what I understand, there is a point where the earnest money is non refundable if the buyer backs out of a purchase (not sure though). At what point does the home inspection take place? Sorry for the beginner question if this has been covered before... Thanks!

@Scott Campbell

Remember at some point everyone on this site didnt know what earnest money was. I still remember asking my mentor what earnest money was. I suggest you get the 6th edition dictionary of real estate terms, its will be useful to you. The only bad questions are the ones not asked.  With that being said I will try to answer a few for you; here goes:

Earnest money is usually money required as an initial down payment that goes along with the purchase contract.  In your purchase contract it should state a time frame or conditions that need to be met in order for  you to either cancel the contract and receive 100% earnest money refund or it becomes the sellers should you not close on the purchase.  

Anyone who is getting a home inspection needs to have it completed within the due diligence period that is agreed on in the contract.  Usually its one of the first things done once a contract is accepted. 

For a typical closing, the people involved are the buyers closing attorney, the sellers closing attorney, the lender if financing is involved, and a Realtor if either buyer or seller has one for the transaction.  Title insurance is usually handled by the closing attorneys. 

Hope this helps you a little.

Originally posted by @Curt Davis:

@Scott Campbell

Remember at some point everyone on this site didnt know what earnest money was. I still remember asking my mentor what earnest money was. I suggest you get the 6th edition dictionary of real estate terms, its will be useful to you. The only bad questions are the ones not asked.  With that being said I will try to answer a few for you; here goes:

Earnest money is usually money required as an initial down payment that goes along with the purchase contract.  In your purchase contract it should state a time frame or conditions that need to be met in order for  you to either cancel the contract and receive 100% earnest money refund or it becomes the sellers should you not close on the purchase.  

Anyone who is getting a home inspection needs to have it completed within the due diligence period that is agreed on in the contract.  Usually its one of the first things done once a contract is accepted. 

For a typical closing, the people involved are the buyers closing attorney, the sellers closing attorney, the lender if financing is involved, and a Realtor if either buyer or seller has one for the transaction.  Title insurance is usually handled by the closing attorneys. 

Hope this helps you a little.

 Oh ok, thanks Curt... So earnest money is like a deposit for buying the property. After I get the home inspected, if there turns out to be a major repair needed, and the seller refuses to fix it, would i still lose the earnest money if i decide not to buy it? Also, what is title insurance? Ive heard of it before, but not sure what it covers. Thanks for the info, learning one step at a time ha ha

Free eBook from BiggerPockets!

Ultimate Beginner's Guide Book Cover

Join BiggerPockets and get The Ultimate Beginner's Guide to Real Estate Investing for FREE - read by more than 100,000 people - AND get exclusive real estate investing tips, tricks and techniques delivered straight to your inbox twice weekly!

  • Actionable advice for getting started,
  • Discover the 10 Most Lucrative Real Estate Niches,
  • Learn how to get started with or without money,
  • Explore Real-Life Strategies for Building Wealth,
  • And a LOT more.

Lock We hate spam just as much as you

Create Lasting Wealth Through Real Estate

Join the millions of people achieving financial freedom through the power of real estate investing

Start here