For many people, buying or selling a home is the largest transaction of their life. They may only go through it a few times in their lifetime as well. Whether it is your first purchase or your fifth, the real estate closing process in Iowa can be complicated and confusing. Below is a brief overview of how the closing process works to give you an idea of what to expect in Iowa.
Step 1: The Offer and Acceptance
This first step is perhaps the one that is most familiar to you. The buyer must make an offer on the home, and the seller accepts it. The biggest factor in this transaction is the price, but there are likely a number of other terms in the actual proposal as well, such as whether there are any contingencies, a timeline for moving in, and any personal property that may be included in the purchase. It is a good idea to have an attorney review the sale contract before you purchase the real estate.
The offer is often accompanied with earnest money. These funds are paid to the seller’s attorney, broker, or escrow agent. This deposit shows the seller that you are serious about the transaction and you are ready to move forward.
Step 2: Disclosures and Inspections
Iowa law requires that sellers provide a Residential Property Seller Disclosure Statement to a buyer once there is an offer to purchase the home. This form is crucial because it tells buyers about any potential problems with the house that they might not otherwise be able to detect.
Under most real estate contracts, the buyer will have the right to inspect the property within a specific time frame. The buyer will usually hire a professional inspector to go out and view the property. The inspector will provide a report that notes problem areas and issues that could mean you will asked to make repairs. If there are problems, you may be able to negotiate that certain repairs be completed before closing or a reduction in the price so the buyer can make the repairs on their own timeline.
Step 3: The Title Search
In Iowa, we use paper abstracts in real estate transactions. An abstract includes all of the necessary documents to show how real estate was transferred or affected for the life of the real estate. An abstract company will also extend the abstract to indicate your sale as well.
As part of the sale process, you should have an attorney give you a title opinion. You can get this process started while the inspection or repairs are in the process, but after the title has been extended. A title search will ensure that the real estate has a good title—or that the seller is legally allowed to sell it and that he or she has all of the rights that they have represented to the buyer. You may need to address problems with the title before you complete the real estate transaction.
Step 4: The Closing Documents
The buyer’s lender will prepare a closing statement that indicates the purchase price of the house, the amount of earnest money involved, any accrued taxes, and fees for the transaction. These documents are in addition to the actual real estate transfer contract. Your attorney, real estate agent, and/or lender will be able to help you review and understand all of these documents.
Danilson Law can walk you through this often-complicated process in addition to providing a title opinion and real estate contract review. Give us a call today to learn more about how we can help.
