Once you receive an offer on your home, you’re in the homestretch: it’s time to start the closing process. The closing phase of residential property sales includes several steps that usually take between thirty and sixty days to complete.
If this is your first-time selling property in North Carolina, you may have questions about how closings work and what to expect. Here, we break down the multi-step process and explain who is involved, what happens, and how to calculate your proceeds from the sale.
Who is Involved?
Unlike some states that allow title companies to facilitate home sales, residential property sales in North Carolina must be processed by a residential real estate attorney. In addition to the buyer, seller, and their attorneys, real estate agents and either an escrow or settlement agent may be involved in the closing.
Ten Steps to Close the Sale
Step 1: Paperwork begins with the offer to purchase contract.
This contract may be a standard form provided by the North Carolina Association of Realtors. Both the buyer and the buyer’s agent will typically complete the form. Alternatively, the offer to purchase may take the form of a customized, tailored offer drafted by an attorney at the buyer’s request. Upon receipt, the seller may accept the offer, return a counteroffer, or reject the offer altogether. Accepting the offer will advance the closing process to the next step.
Step 2: The buyers offer due diligence and earnest money deposits.
First, the buyer will pay a non-refundable deposit directly to the seller to cover the due diligence period, during which the property will be inspected, assessed, and surveyed. Once the offer to purchase contract is fully signed, the buyer will deposit earnest money into the listing broker’s escrow account.
A due diligence deposit is generally non-refundable unless the seller breaches the purchase contract. However, the amount will be credited to the buyers upon closing. Conversely, the earnest money is an amount that buyers offer in good faith to confirm their interest in the property. The buyer’s agent will counsel the buyers as to how much to offer, and sellers will consider these amounts in determining whether to accept or reject an offer.
Step 3: Property inspections commence.
Typically, the offer to purchase will include contingencies for basic home inspections and pest inspections. Deadlines for completing these inspections, as well as any requested repairs, are usually written into the contract. Repair requests are negotiable, and the seller is not obligated to make any repairs unless explicitly agreed in the contract.
Step 4: The sellers prepare disclosures.
North Carolina law requires sellers to prepare a residential property disclosure for the buyer. This disclosure should detail all material facts and identify any major defects in the property that could, realistically, impact the buyers’ decision to move forward with the purchase. The residential property disclosure should thoroughly document the home’s condition, as well as any systems within, at the time of sale.
Step 5: Property boundaries are surveyed and confirmed.
Boundary surveys are a critical component of the closing process. Surveys take place after the appraisal and inspections are complete and approved. The purpose of a survey is to ensure that both the sellers and the buyers clearly understand what property is included in the purchase and sale, including whether there are any easem*nts or encroachments that impact the property.
Step 6: Title is cleared.
Meanwhile, attorneys conduct title searches, acquire title insurance for buyers, and prepare deeds for sellers. The buyer and seller need to have separate attorneys, rather than relying on one attorney to facilitate the closing. Without an attorney to represent each party’s interests in the sale, a conflict of interest may arise should a dispute occur between the buyer and seller.
Step 7: The buyer prepares to take possession.
Before the parties sign the final paperwork, the buyer will prepare to take possession of the property. Preparations include applying for hazard insurance, switching utilities into the new owner’s name, and similar tasks needed to take over ownership.
Step 8: The closing meeting is set.
The settlement conference, or final closing meeting, is the culminating step in the closing process. Typically held at the office of the buyer’s attorney, the parties will meet to tender the purchase money and sign closing documents. The seller’s attorney prepares the deeds for the sale which should be signed and forwarded to the buyer’s attorney before this meeting. Prorated items like taxes, interest, and association dues are calculated to this date, which is when the seller officially relinquishes the property.
Step 9: The buyer pays.
The closing attorney will confirm receipt of loan funds and other cash, and pay any remaining balances on existing mortgages, liens, or pay other closing costs. The remaining funds will go to the seller.
Step 10: The deed is recorded.
The sale is complete once the paperwork is filed. The buyer’s attorney will record the new deed at the Register of Deeds’ office in the county in which the property is located. Once the deed is recorded, the buyer can officially take possession of the property and it is out of the seller’s hands.
How Much Will This Process Cost Sellers?
There are closing costs and expenses to keep in mind when calculating the proceeds from the sale of a home or property. Closing costs will be deducted directly from the sale proceeds and include items like real estate commission, mortgage payoff, taxes, HOA fees, tax stamps, attorneys’ fees, and any closing costs negotiated as part of the offer to purchase contract.
If you have specific questions about your contract, reach out to one of our attorneys for a consultation. At Green Mistretta Law, we are committed to delivering the best possible results for our clients and take pride in offering superior legal counsel. Give us a call or reach out to us online to learn more.
This article does not establish an attorney-client relationship and must not be construed as legal advice.
