Home and commercial space transactions can be complex, and the timeline is subject to individual circumstances. Below are the general steps and how you can best set yourself up for a smooth transaction:
1. Accepted Offer
When the seller accepts your offer, you and the seller will enter into a contract called the Purchase Agreement. At this point, you will pay the first round of earnest money. An attorney is hired right away to follow and maintain the deadlines, review the contract while looking out for your best interest, and answer any questions you may have about this important transaction. Attorneys can also help with any contingencies you may want included that allow you to walk away from the purchase if certain conditions were not satisfied.
2. Inspection
Buyers have the option to hire a professional inspection company to review the property and indicate any items of concern. This information can be useful during final negotiations with the seller. You can ask for repairs to be made or repair credits before closing though seller is under no obligation to agree to them. An attorney will advise on and facilitate those negotiations during the review period.
3. Attorney and Inspection Review
During this stage, both the buyer’s and seller’s attorney will exchange a series of letters proposing alterations to the Purchase Agreement, negotiate repairs and credits, and review any other associated documents such as those in condominium transactions. Attorneys also negotiate property tax proration and explain how property taxes are paid in your area. Once review is closed out, there could be a second round of earnest money due. See our article on tax proration in Chicago HERE.
4. Title
Title insurance is purchased to protect buyers and lenders from financial loss due to liens or defects in the title and ownership of the property. A title company will perform a title check for claims such as liens or judgments, confirm legal ownership, and determine if anything must be settled before closing. Attorneys can assist in this process by explaining title insurance thoroughly and advise on issues that may come up during the title search. There are different ways buyers can take title so be sure to have an attorney explain and aid you in your decision. See our article on taking title HERE.
5. Final Steps Before Closing
There will be an agreed upon mortgage commitment deadline if you are taking out a mortgage. Before the deadline, your lender must give the go ahead to close after they “commit” to lending the money for the property. In addition, there will likely be a final walkthrough before the closing date where buyers can check for full functionality of appliances and any damage, confirm requested repairs were made, and ensure the seller is completely moved out of the property. If anything needs to be addressed, your attorney and both parties will make sure everything is cleared up before the closing occurs.
6. Closing
At the closing date, keys are exchanged, and the closing documents are signed. Your attorney should make sure you understand everything about this important step.
FAQs
How much will this cost in addition to the Purchase Price?
As a buyer, you are responsible for a share of the closing costs associated with the transaction. These could include mortgage lending and application fees, interest fees, prorated property taxes, title company closing fees, and other administrative or processing fees. We charge a flat rate for our services due at closing. Contact us at www.acunalawoffices.com/contact for an individual estimate or go to www.acunalawoffices.com/real-estate-transactions.
How long will the transaction take after we make an initial offer?
This is often subject to the particular circumstances for each transaction. Usually, the buyer’s timeline is between one and a half to two months.
What is Earnest Money and what is an Escrow Account?
Earnest Money is a deposit that the buyer must pay in order to bind a purchase. This money is held in an escrow account by a third-party escrow agent until the contract has been fulfilled. If the purchase goes through, the money will be applied to the purchase price. If the sale falls through for reasons other than contingencies, the seller could get to retain that earnest money.
