The Closing Process – The Buyer’s Perspective
Buying property can be an exciting experience, but also a daunting one.
You spend countless hours looking at property after house after home… until you finally find “The One”. And then you make an offer, you think it’s finally over -but no… with the “closing” process comes another set of hoops that you need to jump through.
This closing process -known in different parts of the world as settlement, escrow or completion is the final step in executing any real estate transaction. Both parties negotiate a closing date which is usually several weeks after formal acceptance of the offer. On that closing date, should all criteria be met, ownership of the property is transferred to the buyer.
Luckily for most the closing process, worldwide, is becoming, thanks to emerging tech developments, increasingly automated.
On average any property transfer in South Africa will take three months -from the date of sale, until the property is registered in the new owner’s name. But, of course, there are external factors lying in wait to delay the process -from waiting for stipulated contractual conditions to be fulfilled, to jumping through bureaucratic hoops for a rates clearance certificate.
Here Are A Few Things for You to Expect During A Closing
- Simply speaking this is merely the period allowed for completion, signing and filing of all the necessary paperwork needed to complete the transaction. If you are lucky, it can be quite brief.
- This paperwork includes deeds, loan papers, clearance certificates and any contractual representation of negotiated terms.
- Residential closings are generally conducted in an office setting, sometimes with both buyer and seller sitting at the same table, filling out their respective paperwork and contracts simultaneously, although this is not a given.
- Once the transfer of the property title from seller to buyer is finalised, the seller receives payment for the home and the buyer receives the keys.
- The agent handling the closing deducts from the amount credited to the seller, the relevant and negotiated transaction costs such as the remainder of existing mortgage, transfer costs, and fees for clearance certificates.
On average any property transfer in South Africa will take three months -from the date of sale, until the property is registered in the new owner’s name.
Here Are A Few Tips to Help Ensure Smooth Sailing During Your Closing Period
The most common cause of a delayed closing stems from buyer’s financing. To speed up this process, and as a bonus – to strengthen your offer, obtain a mortgage pre-approval letter from a financer prior to making your offer on a home. A pre-approval letter shows buyers that you are qualified to purchase, and that financing is already settled in anticipation of final signatures.
Appraisals are a must to receive a mortgage from a lending company. If the appraisal comes in too low, it will send you back to the negotiating table. A seasoned agent will prevent this happening, and worst case scenario -will be able to help you navigate this sticky situation and get the deal back on track.
Securing homeowner’s insurance is another necessity prior to occupancy and can easily delay your closing. It’s critical to secure homeowner’s insurance with plenty of time to spare during the contract period.
What You Do During the Process
One of the best parts of the closing procedure is that buyers and sellers need do very little. At the closing itself, all papers are prepared by closing agents, title companies, lenders, and lawyers. This paperwork reflects the sale agreement and allows all parties to the transaction to verify their interests.
Further to this, buyers typically will have a last opportunity, before closing is concluded, to walk through the property to assure that its condition has not changed materially since the sale agreement was signed.
While the closing process might take longer than expected, wearing the patience of the excited buyer a little thin. It’s wise to make sure have all your paperwork, including your agreements with financing parties, in advance of negotiation to ensure that the process goes down without any hiccups.