Transaction Process

The following scenario steps through a typical residential real estate transaction in which the bulk of the purchase price is being financed. A number of these steps, as presented, may occur concurrently and others may not be in exactly the order of occurrence.
  • A written Offer to Buy is prepared by the Buyer, usually with the help of the Buyer’s Real Estate Agent.
  • The Seller accepts the offer, sometimes after a series of counteroffers, and usually with the help of the listing agent.
  • The Buyer then applies for a loan, usually under the guidance of a loan originator.
  • Both Buyer and Seller then prepare a Statement of Information, a general information form about themselves.
  • The Seller prepares a Statement of Outstanding Loans and Liens and any other claims against the property.
  • Both Buyer and Seller prepare, with the help of their respective Real Estate Agents and usually the escrow company, a set of Escrow Instructions. These
  • Instructions can be prepared jointly, as a single document, or separately – by each individual.
  • Upon receipt of the Escrow Instructions, an escrow file for the transaction is opened and a Preliminary Title Search is ordered by the escrow company. Any necessary signatures to open the escrow are gathered and the escrow process begins.
  • The escrow company receives the Title Report and reviews it for liens and any other demands upon the property. This report will help define the Seller obligations necessary to clear title for the property. The Title Report is compared with the Statement of Outstanding Loans and Liens prepared earlier by the Seller.
  • The escrow company notifies the Lien Holders of the impending transfer and orders Demands for Payoff.
  • The escrow company orders any other necessary inspection reports – such as a Termite Inspection, etc.
  • The Seller reviews and approves the Demands for Payoff.
  • The Seller approves the Preliminary Title Report.
  • The Buyer fulfills all requests of the Loan Processor to complete the Loan Package and obtain financing.
  • The Buyer approves the Preliminary Title Report.
  • The loan is approved and the Buyer signs the necessary loan documents. The lender prepares for funding.
  • The Buyer deposits any other necessary funds.
  • The escrow company reviews all documentation received by escrow. This includes the loan package, Inspection Report, Title Report, Demands for Payoff, and other claims and obligations – planned for or unexpected – that will fulfill the Escrow Instructions or introduce delays in the closing process.
  • The escrow company prepares any exceptions to the instructions that might take the form of Amendments.
  • The Buyer and the Seller sign any necessary Amendments in order for the deal to go forward.
  • The escrow company then presents all necessary documents for review and signature by both the Buyer and Seller.
  • The escrow company then becomes an Expediter – following up on and reacting to any activities necessary to expedite the closing.
  • The escrow company receives the proceeds of the loan from the mortgage company.
  • The escrow company establishes a target closing date and notifies all parties to the transaction.
  • The escrow company then coordinates the issuance of the Title Policy with the Title Insurance agent.
  • At closing, the escrow company pays off the liens and other claims, prepares a final Statement of Settlement, orders the Recording of Title, delivers all contracts, policies, statements, and other paperwork to the appropriate parties, and delivers any funds to the Seller and, possibly, the Buyer.
  • The escrow is signed off as “Closed.”

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