What are some of the biggest days in a person’s life? We can think of a few popular answers:
- The day you get married
- The birth of a child
- The big game in high school where you pulled out the game-winning touchdown
- The day the Cubs broke the curse and won the World Series
Another big moment? What about that day when you sign on the dotted line and take the keys to your very first home?
For many of us, buying a home will be one of the biggest personal and financial decisions we ever make. Buying a home is about finding a place to live, sure, but it’s also about so much more than that. Purchasing a home is about investing in the future. It’s about setting yourself up to build wealth – while also choosing the spot where you’ll sleep, cook, play, plan adventures, and raise your family.
In short? Buying a home is a big deal. And that moment where everything comes together, and that home becomes yours? That event is a pretty big deal, too, and it’s important to go in prepared.
As real estate attorneys and title agents, our staff often gets asked about what goes into a real estate closing.
What Does “Closing” Mean in Real Estate?
As NOLO describes it, a closing is, “the final performance of all of the agreements you made with the seller and your lender for the purchase and financing of your new home.”
More simply? It’s when you as a buyer sit down at a table with loan documents, checks, and purchasing agreements in hand, to finalize the details with the seller and their representatives and take possession of the property. It’s the moment where money, and the home, change hands, so you can start moving forward and building the future you’ve always dreamed about.
Leading Up to Closing
In most real estate transactions, the closing will be fairly straightforward. It’s the end date of the real estate transaction, so all the hard work – inspections, contract negotiations, loan agreements, title searches, and so on – will all have taken place already.
Generally, the buyer will propose a closing date as part of their initial offer on the house – for instance, a “30 day close” means that the buyer will have 30 days to perform all of the tasks that need to be done while the home is in escrow. The closing date is negotiable, and buyers and sellers will generally come up with a timeline together, (hopefully) benefiting both parties.
Shortly before closing, the buyers will take their final walkthrough of the property. Before actually sitting down at the closing table, buyers will also generally want to start reviewing some of their paperwork, including the closing disclosure, which outlines the terms of the loan, closing costs, and other fees.
The Big Day: What Happens at Closing?
At closing, buyers will need a pen, a valid ID, and a warmed-up writing hand.
Generally speaking, the big event itself is going to be all about having the buyers sign important paperwork, including legal documents, such as loan agreements and key documents transferring ownership of the property from the seller to the buyer.
At closing, buyers will also be responsible for making some key payments, including covering closing costs and escrow fees. Most commonly, these payments are covered by cashier’s check or wire payment. Closing is also generally when the buyer will put forward the balance owed on the purchase price of the house, so the closing date begins the process of disbursing proceeds and allocating money to the appropriate parties.
Once closing is finished, the deed of ownership will have transferred from the seller to the buyer. The buyer will take the keys, and, officially, they’ll be a homeowner.
Typically, at this point, the buyer can assume occupancy of the property immediately, or at least within a few days. Sometimes, buyers and sellers will work up alternative arrangements, however, delaying possession – a “rent-back agreement” is one common example. There may also be a few remaining details to hammer out post-closing, including settling reimbursements for property taxes or, in some cases, tackling maintenance and repair projects that could not be completed pre-closing.
Real Estate Transactions: The Little Details and the Big Picture
Of course, we’ve barely scratched the surface on what actually goes into a closing here in Chicagoland. It’s also important to remember that while the broad strokes are usually the same from closing to closing, the specifics will often vary from case to case. It’s important to understand what typically goes into this process – and recognize that, sometimes, it may go differently than you’re expecting.
Bottom line? There’s a lot that goes into buying or selling property in Chicagoland – from processing purchase and sale agreements, to handling title paperwork, to navigating the development, zoning, and tax laws unique to our city and state.
As you begin the process of purchasing a home, it may prove important to partner with a real estate attorney who performs those services and more with both legal expertise and financial insight. At the end of the day, how all of the paperwork is put together can significantly affect your long-term financial goals, including tax liabilities, access to cash, and estate transitions.
That’s where the Gunderson Law Firm can step in and help. Our attorneys and staff possess unparalleled expertise and insight, bolstered by years of experience and long-term connections throughout Chicago’s real estate, finance, and insurance industries. We can help you put the right papers in the right places, addressed by the right people, at the right times, all in order to move your project forward as smoothly as humanly possible.
Have any more questions about any aspect of buying or selling a home in Chicago? Curious about our approach to real estate law? Don’t hesitate to drop us a line to keep the conversation going.