Real Estate Closing Process

Everything Agents Need to Know About the Real Estate Closing Process

by The CE Shop Team

How to Close a Real Estate Deal 

As a new or experienced real estate agent, there are many things you need to keep in mind to ensure that you have a successful closing process. This is a big moment for your client, so you'll need to be thorough on each step throughout the closing process. This way, your client feels comfortable and you will have a smooth transaction. Don’t forget that this is an emotional transaction, so it's essential to be there for the client.

Understanding the essential steps in the real estate closing procedure is vital, especially for prospective and new real estate agents to learn the details needed for a smooth transaction. Continue reading to know the steps of closing a real estate deal.

8 Steps of the Real Estate Closing Process

You will find the entire procedure broken down into eight steps below to give you an in-depth understanding of the real estate closing process. Note that there might be some differences from listing to listing or from state to state, but these are the general steps you can follow.

1. Direct Your Client to Open an Escrow Account

In most real estate contracts, the house seller designates a title company or a closing attorney to oversee the transaction. The attorney or title company acts as a third party to uphold the contract terms of both the seller and buyer without any bias. The third party holds all the loan documents and money related to the transaction until the end of the entire process.

After signing the contract, the real estate agent or the seller should notify the title company about the transaction. You should also send a copy of the agreement and request the opening of an escrow account. The house buyer should offer a cashier's check or earnest money and make a wire transfer into the escrow account within the specified time indicated in the contract, usually 48 to 72 hours. This guarantees a secure transaction for both parties.

2. Complete a Title Search & Order Title Insurance 

Next, the closing attorney or title company orders a title search to get the title insurance policy. This process helps to ensure that transfer of house ownership will go smoothly at closing. Note that if the house seller isn't entitled to make the real estate transaction, it's impossible to transfer the title. Some elements that would prevent the transfer of ownership of the property would be title defects, encumbrances, or liens. Other issues such as unpaid property taxes must be addressed before closing day.

If the title search is clear of defects, the attorney or title company will order the issuance of a title insurance policy. The policy protects the property buyer against any future claims to closing. Still, it protects the lenders and real estate owners against any damages or losses stemming from title defects, liens, and encumbrances.

3. Get a Home & Pest Inspection 

A home inspection is optional in most contracts, but many buyers insist on this process to ensure there are no hidden issues in the property. As the real estate agent, once you confirm the receipt of the earnest deposit, you can order for an inspection of the property. You can have a professional inspector visit the house since they are better equipped to spot any underlying issues that can sneak up in the future. In fact, most home buyers usually include a home inspection contingency in the property purchase contract.

Typically, a home inspection evaluates the quality, safety, functionality of a home's features, and possible pest infestation. In the case of pest inspection, a specialist checks that the house doesn't have wood-destroying insects such as carpenter ants or termites. Make sure that any pest issues get fixed before closing day because even a minor infestation can spread and become destructive and costly to resolve. 

Pro Tip: 

As a real estate agent, you should build a network of trusted professionals. These people can consist of lenders, movers, inspectors, and MLOs. The more extensive your network is, the more your business will grow through referrals and networking, and the more assistance you can provide your clients.

4. Get a Lender-Approved Appraisal 

In cases where a homebuyer uses a mortgage loan to purchase the house, the lender will want an approved professional appraisal. This ensures that the borrower's home loan estimate is in line with the home's market value. An appraisal is usually based on the estimated value of the features in a home, as well as comparable houses sold around the area.

If the appraisal is less than the sale price, a loan officer will likely disapprove of the home buyer's request. The home appraisal should be at the purchase contract price or even higher. If the appraisal value is lower, the buyer can lower the cost, change the appraisal, or make up the difference.

5. Renegotiate the Offer’s Terms 

One of the reasons you shouldn't overlook an inspection before a home purchase is that it can help renegotiate the offer terms. Even after the purchase offer, you still have a chance to renegotiate a new price. Therefore, if there are issues during the home inspection and a home inspection contingency was also part of the purchase contract, you now have a window to renegotiate a new home buying price with the seller.

You can ask the homeowner to make all the necessary repairs or to drop their sell price. Alternatively, the cost can remain unchanged and the seller pays for the repairs. Still, you can do some renegotiations by asking for a concession, usually a credit by the property seller at closing, or request an extension of the closing date. As long as all these happen within the inspection period, the seller can make the changes or allow the house buyer to exit the contract without penalties. If the negotiation falls through, the home inspection contingency usually protects buyers when they choose to withdraw the purchase offer. With better real estate renegotiation tips, you have more chances of getting a better purchase price for your client.

6. Schedule a Closing Date 

Once the contract terms are complete and approved, the closing agent will oversee the transaction's closing. The coordination of the closing date involves the seller, buyer, and possibly the mortgage lender. For accuracy purposes, the escrow company should send the closing paperwork to the buyer and seller to review the documents before closing.

Lenders re-run the credit report for homebuyers using a mortgage and lock in the interest rate a few days before mortgage closing. After confirmation, the lender sends the buyer TILA-RESPA integrated closing disclosures, including the closing costs, about three days before closing.

7. Conduct the Final Walk-Through 

Typically, the final walk-through takes place within 24 to 48 hours before closing. Homebuyers have a chance to look over the property to ensure there are no alterations before signing the paperwork. In the walk-through procedure, make sure there are no new damages since the last home inspection. Also, verify that the seller completed all the fixes as agreed on the contract. If there are any problems with the property at this stage, the seller must address them to prevent delays in the closing. Don't forget to check that everything that was in the purchase agreement is still in the house.

8. Sign Closing Documents 

The final step of a real estate deal happens during the signing of the closing documents. Both parties can meet in person in the real estate attorney's office or the title company's office. In some states, the paperwork can happen in the presence of a notary. You can then return the documents to the closing agent before or on the closing day.

Make sure you explain to the buyer all the details in the paperwork since the fine print might have a significant impact in the years to come. Also, confirm that all the agreed terms and the interest rate are correct and dispute any illegitimate fees. After signing the paperwork, the buyer makes all the payments required for homeownership.

How Long Does the Closing Process Take? 

The closing period varies, but it generally takes a few weeks or even a month or two. According to, the initial offer date to the end of the closing takes an average of about 50 days.

There might be some delays due to complications in title defects, errors in credit reports, paperwork processing issues, changes in some public records, or even a delay in financing from the mortgage lender. Also, when a lender goes through the underwriting loan procedure, it will take time for the loan officer to determine whether the buyer qualifies for the loan and delay the closing. Still, both parties have obligations they must fulfill under the sale contract. For instance, a seller will notify subscription services about their new address, collect any warranty for the house appliances, and shut off water valves. The buyer should obtain homeowners insurance and arrange for utility transfers. The closing costs incurred are usually split between the two parties.

If you are an experienced or new real estate agent, this guide outlines all the essential details you need to know about the closing process. For more insights about the real estate industry, please contact us or check out our vast library of free content in Agent Essentials.