What Is the Financial Process for Selling a Home?
Often, the most time-consuming step of selling a house is finding a willing buyer who agrees to pay a fair price for the property. Once over that hump, the next matter is getting the required financing in order. The buyer is responsible for much of the home-financing process, but you should still understand and monitor each step of the process yourself.
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Receive Earnest Money
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The buyer is normally required to give you earnest money (a deposit) at the signing of the sales agreement. This is the first step of the financing process required to purchase the house. The earnest money shows that the buyer is serious about his intention to buy the property. He must issue the amount as a cashier’s check to put in a trust account -- the deposit will become a credit to the sale at closing. If the sale does not finish and it is the buyer’s fault, in some cases at least a portion of the deposit is nonrefundable.
Investment in Repairs
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The next step in the financial process of selling a home is to take care of any repairs required per the sales agreement. This is your financial obligation as the seller. In most cases you have to bring the property up to town code before proceeding with the sale. If you do not have the cash, you might have to apply for a line of credit or borrow from another source to cover the cost. In some cases the buyer might agree to concessions in exchange for no repairs to the property, such as a credit toward the selling price at closing.
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Paying the Real Estate Agent
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The next step of the financial process of selling a home is paying the real estate agents and other parties to the agreement. Generally, as the seller you cover the agent fees while the buyer covers the other closing costs. The closing agent deducts the required real estate agent fee from your seller proceeds.
Closing the Deal
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In addition to the agents that help broker the agreement, you or the buyer must also pay lawyers, the title agent, home inspectors, the lender and appraisers to close the deal. The closing agent divides up these payments at the closing table from the buyer’s closing costs (or seller proceeds if you’re responsible for the fee). Once all other parties receive their portions of the financing for the deal, you receive your net proceeds from the closing agent as well. After all financing steps are completed, the title agent officially transfers ownership of the home to the new buyer.
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