9 Steps to Closing on a House: A Seller’s Guide to the Finish Line

You cleared out every cluttered nook of the house, ditched the bright yellow kitchen wall for a neutral hue, enhanced your curb appeal to perfection, and found a top real estate agent whose marketing plan worked its magic. Voila! A buyer made a great offer on your home and you wonder — OK I’ve come this far, but what’s next?

Don’t lose focus yet. Throughout closing, you’ll need to finalize logistics like your move-out date, prepare your home for the inspection and appraisal, and make hard decisions during final rounds of negotiations. This time period can range anywhere from 30-45 days, so it’s crucial you are attentive during each step to avoid delays.

We’ve consulted top real estate agents who have decades of experience to break down all the steps to closing on a house. We’ll point out where you can make decisions early, warn you of common issues that pop up and how to solve them, and let you know when it’s best for your agent to take the reins.

Here’s your list of steps, which we’ll break down individually below:

Step 1: Sign the purchase offer to set closing in motion

Step 2: Open escrow to hold crucial funds and documents

Step 3: Clear title on your home

Step 4: Open your home for the general inspection

Step 5: Accommodate any additional inspections

Step 6: Negotiate based on the inspection findings

Step 7: Confirm your home’s value with an appraisal

Step 8: Sign closing paperwork to seal the deal

Step 9: Collect your proceeds!

A pen used to close on a house.
Source: (kan_chana / Shutterstock)

Step 1: Sign the purchase offer to set closing in motion

Your buyer submitted a purchase offer. What sweet relief. Someone wants to buy your home, and you’ve got it in writing!

But be warned: this document holds every detail about how your home will change hands, determines who keeps what down to the window treatments and refrigerator, and sets deadlines for each party that are legally binding. Review it with care.

At this point in time, you’ll work with your real estate agent to tweak items like:

  • Any negotiations over the purchase price and conditions of payment
  • The buyer’s earnest money deposit (timing for delivery and total amount)
  • Rules around possession of the property and how long it’s yours
  • Which fixtures, major appliances, and other items stay or go
  • Expected time frames for the inspection and appraisal
  • Closing and move-out dates

Depending on how fast you and the buyer come to an official agreement on the contract terms, you may go through a round or two of counter offers until everyone is happy. Once signed, the purchase offer becomes a purchase contract… and now you’re ready to start the process of closing.

Tips to manage the offer stages:

  • Know what you plan to take with you and disclose it upfront.
    Specifics vary by state, but it’s generally assumed in a real estate contract anything that’s permanently attached to the house stays… even when you go to sell the property. So if you bought a 5-range Viking stove that you plan to take with you, talk to your agent about whether (and when) you’ll need to provide the proper disclosures.
  • Over-communicate, and lean on your agent.
    An offer over list price that will require five extra projects and a cash offer under list price with no inspection can both be winning offers — just for different sellers. Share your priorities with your agent early and often so they know what to advocate for on your behalf.
  • Use a net sheet to understand your bottom line.
    Keep tabs on your end-of-day proceeds with a net sheet, a document that estimates how much cash you can expect to take home after subtracting fees and expenses from the sale price. “The net sheet is so easy to do, and it builds confidence because the seller can really say [to their agent] that ‘OK, this is what I’m looking at, you’re committing to this’ and the answer’s always ‘yes,’” explains Diane Grove, top-selling real estate agent in Fort Worth, Texas.

Curious how much you’ll net on your home sale but haven’t found an agent yet? Try HomeLight’s Net Proceeds Calculator to get a first read on your payout in minutes.

Step 2: Open escrow to hold crucial funds and documents

The earnest money deposit is a small portion of your buyer’s down payment and is due a few days after you both agree on a price and sign the purchase contract. It’s a centuries-old gesture of good faith that balances the scales: As the seller, you’re no longer the only one with skin in this game.

“There’s some parts of the country where they want 1% of the purchase price for the earnest deposit, but in our area we see lots of $500 and $1,000 payments. $1,500 is the highest (deposit) money we see,” explains Kimberly Plourde, top-selling Portsmouth, Virginia agent with over 21 years of experience.

Your buyer will be responsible for opening an escrow account to temporarily hold the earnest money out of everyone’s hands. Remember, the sale usually isn’t final until inspections, appraisals, and any other items on the contract are complete.

During this waiting period, your escrow or closing officer, a third party professional, safeguards the money in a neutral account until the sale closes. They’ll also act as taskmaster, diligently checking off each line of the contract and making sure deadlines are met before releasing the funds.

Tips for setting up escrow:

Talk to your agent about an appropriate earnest money deposit.
Would they advise a higher deposit of 1%-3% to reel in the most serious candidates, or is a more modest deposit in line with area customs?

Discover where escrow accounts are held in your region.
It could be an escrow or title company, or attorney’s office. Then, ask your real estate agent which party (buyer or seller) usually picks the specific company in your market or if it’s negotiable. Your agent should have a short list of trusted closing officers they rely on for detailed, efficient closings — and buyers may be open to your suggestions if you have them.

Source: (Wesley Tingey / Unsplash)

Step 3: Clear title on your home

Before you can sell your home, you’ll need to clear title. This involves performing a title search to ensure there aren’t any loans, liens, or claims on the title of your home that would prevent you from selling it free and clear. Issues that come up run the gamut: unpaid child support, renovation projects that weren’t permitted with the city correctly, gambling debts — all of these could raise red flags in the title search.

And no matter how squeaky clean you think your home’s record is, know that title issues take place in 25% of real estate transactions, according to the American Land Title Association. Even if you purchased a new construction home 10 years ago, for example, the land you purchased that new build on could have hidden heirs that weren’t discovered when you bought it.

Here are some of the main title issues to look out for:

  • Paperwork errors while transferring the title to you or a previous owner
  • Outstanding fees like HOA dues and property taxes
  • Contractor liens that show you failed to pay for a service or repair
  • Boundary disputes, like if your neighbor’s property survey shows that the edge of your back yard is actually theirs
  • People who can stake a claim on your home and complicate your ability to freely sell, like ex-spouses of previous owners or hidden heirs

Tips for a faster title search:

Order a preliminary title report.
Rather than wait for surprise title issues to come up during closing, you can order a preliminary title search to get a jump start on correcting issues like boundary disputes or deal with simple fixes like outstanding waste-collecting fees ahead of the game. “You’re better off knowing the error upfront then finding it out later because the title work doesn’t usually get done until the last-minute,” says Jennifer Murtland, a top-selling real estate agent in Cincinnati.

Locate your abstract of title.
This is the document that shows the history of ownership and proves you cleared title when you bought the home. Can’t find it? You’ll likely be charged for a new one, so check one more time and then ask your lender or real estate attorney if they have a copy (they probably do). If title companies have a current abstract of title to work off of, they can often recertify it rather than starting from scratch.

Start organizing early.
Pull out the entire stack of “house paperwork from that neglected drawer. Use a filing system or binder to divy up the documents into categories like bills, warranties, receipts, and official documents. That way, you can proudly produce that kitchen backsplash installation receipt if your title company asks for it and eliminate any scrambling.

Step 4: Open your home for the general inspection

Let’s be honest: Buying a home without an inspection is a gamble. So, most buyers are going to get one. There’s only so much the untrained eye can uncover in a 30-minute showing.

If you are stuck with an inspection contingency, you’ll open your home for the buyer, buyer’s agent, and the professional inspector for anywhere from 2-4 hours (you should find an errand to run while they’re there).

This will give buyers the opportunity to make sure the systems in your home are in working order and that there are no major problems with the property. These are the big things an inspector will look for:

  • Structural defects or malfunctions, like evidence of foundation damage.
  • Problems in systems such as electrical or plumbing, often knob and tube wiring in older homes or water damage as a result of faulty pipes.
  • External property issues like retaining walls, drainage, grading, or any plants that affect the home.

But also expect the inspection to give new meaning to the word thorough. “It’s typically conducted with the buyer and the buyer’s representative going through the entire property from top to bottom — every outlet, every toilet, every everything,” says Plourde.

The inspector will need about 3-4 days to compile their findings into a report. When your buyer and their agent get ahold of it, they’ll quickly huddle to decide whether to schedule specialty inspections based on the results or move into a final round of negotiations.

Tips for the home inspection:

Set strict deadlines for completion.
A good window to aim for is no later than 5-10 days after going under contract. Buyers usually require the contingency to walk away with no repercussions if they don’t like the inspection results, meaning you’d have to start over and find a new buyer. Talk to your agent about steps they take to nudge buyers to be proactive about completing this step.

Make sure your home is accessible.
The inspector will need to evaluate areas like the basement, attic, garage, and crawl space. If they can’t access a particular space during the inspection, they will have to mark it as “uninspectable” which could prolong the process.

Get a pre-listing inspection.
Ward off any surprises in the buyer’s inspection by hiring an inspector to come through before your house hits the market. That will give you the opportunity to make any repairs upfront and also decide what you’re not willing to fix. Be aware if you do this though, you’ll likely need to disclose the results of your inspection to buyers upfront.

A house that will be sold.
Source: (Annie Spratt / Unsplash)

Step 5: Accommodate any additional inspections

A 19th Century Victorian is a different beast than a ranch home on 30 acres of land. Additional inspections help a buyer investigate a home’s unique problems, like lead-based paint or termites, that can only be flagged in a run-of-the-mill home inspection.

And as long as they meet the deadlines specified in your contract, buyers can choose to conduct any inspections that may give them peace of mind, regardless of the general home inspection results. Here are the most common issues buyers uncover before moving forward: 

  • Mold
  • Well or Septic
  • Pest
  • Termite or wood infestation
  • Radon
  • Asbestos
  • Lead
  • Water quality
  • Pool

Tips for the final round of inspections:

Disclose everything you know about the property.
Most states require you share any history of mold, structural issues, pests, or other problems you’re aware of. You’re only responsible for what you know (you don’t have to dig up your backyard to see what kind of pipes you have) but disclosures are legally binding. Research the requirements and share with your buyer early in the closing process so they can choose to schedule things like asbestos or mold inspections right away.

Research inspection norms in your area.
Depending on your buyer’s loan and local regulations, certain inspections (such as to check for termites, evaluate the septic system, or determine the condition of the pool) may be required or custom for the area.

Step 6: Negotiate based on the inspection findings

Buyers don’t usually hand you a copy of inspection reports (they paid for them, after all) so it’s up to your agent to anticipate the many chess moves the buyer can play with these final negotiations. Buyers have the option to:

  • Proceed with no repairs requested (not likely)
  • Renegotiate the purchase price to reflect needed repairs, especially with big-ticket items like structural or foundation issues
  • Request you to take care of repairs, common with small projects like replacing GFCI outlets
  • Request a credit for needed repairs
  • A combination of the above, based on the different issues that were revealed
  • Back out of the deal (and keep the earnest money deposit)

If your buyer sends you 30 repair requests, it’s natural to feel emotional or even defensive, but it could just be a negotiation tactic. Sit back and let your agent get to the bottom of what buyers really need taken care of to stay in the game. If they’re reasonable requests and you don’t have a line of other buyers waiting, compromise to solve the problems.

Your agent will know when to offer alternatives like home warranties and credits in response to hard demands, and when to call a buyer’s bluff on over-the-top requests. The good news is only 4% of contracts were completely terminated in February 2020, so you should be able to hash out the details and move onto the appraisal.

Tips to keep the waters calm during inspection negotiations:

Work through a sample inspection report with your agent.
Do this ahead of time to decide how you’ll react to each potential request when emotion kicks in. If the buyer asks for a carpet allowance and you hand selected the seafoam carpet in the den, you can quickly move past any hard feelings to your pre-determined response.

Keep it simple by offering a credit, rather than completing repairs yourself.
“Whenever possible, we recommend a credit because it eliminates liability for the seller and it eliminates the ability of the buyer to come back 2-3 days before closing and say they’re dissatisfied with the craftsmanship of the work”, says Blake Taylor, top real estate agent in Austin who earned HomeLight’s 2019 Top Producer Achievement.

Document any repairs and send results to the buyer a week before closing.
Taylor continues, “There are some circumstances where you must perform the repairs. Roof-related issues, if it’s something related to termites for a VA or FHA loan, in that circumstance we recommend a licensed and bonded contractor that warrants the work. Sellers need to document the work before and after it’s complete and provide paid receipts and photographs of the work to the buyers at minimum a week in advance of closing.”

If you suspect your roof or another feature may end up needing repairs, call your agent to see if they have a qualified vendor who can be there in a flash if repairs are needed to close.

Pencils used to close on a house.
Source: (Kelly Sikkema / Unsplash)

Step 7: Confirm your home’s value with an appraisal

If your buyer is obtaining financing, their lender will require an appraisal to ensure they aren’t loaning out more than the property’s fair market value. So in this next step to closing, an appraiser will run a property analysis (likely using the comparable sales method) and conduct an onsite visit to form an opinion of value.

An appraiser will survey things like how loud your neighbors are, where the nearest highway is, and what your floor plan is like. An appraiser will also look at how many beds and baths you have, the age and quality of your roof and appliances, and any upgrades made to the home.

About 90% of the time, industry experts estimate, a home will appraise at or above the contract price. In the event that the appraisal comes in under contract value, one of the following things will need to happen:

  • The buyer makes up the difference in value with their own funds.
  • You (the seller) agree to lower the price to the appraised value.
  • You meet somewhere in the middle (buyer brings some money to the table, seller drops price a bit).
  • You challenge the appraisal with a reconsideration of value (which has to come from the lender).

However, you should be able to get a solid idea of what your home will appraise for using market research and your agent’s comparative market analysis.

Tips for the appraisal:

Prep your home for a showing one last time.
There’s no checkbox for “smell” on the home appraisal report, but it never hurts to make a strong first impression. After all, your goal is to convince the appraiser your home is worth what the buyer agreed to pay. Remember what it looked like for the buyer’s first visit?

Deep clean, declutter, and spruce up your curb appeal. You’ll also want to secure or remove your pets before the appraiser’s onsite visit. Consult our guide to home appraisal do’s and don’ts for more guidance.

Step 8: Sign the closing paperwork to seal the deal

The paperwork you’ll need to sign at closing day — you guessed it — varies by state and county so connect with your agent for the exact forms your market and situation requires. However, you can expect to review these main documents to complete your home sale:

  • Property Deed
    This is the big one. This document officially transfers ownership from you to the buyer.
  • Affidavit of Title
    You’ll sign this to declare that there are no liens on the property, that you are the sole owner(s), and are not selling it to anyone else or filing for bankruptcy.
  • Settlement Statement or Closing Statement
    This lays out all the fees involved in the transactions and who’s paying them, as well as how much money you will be walking away with.
  • Closing Disclosure
    This helps the buyer confirm that all the terms of their mortgage are correct. You’ll likely receive a copy if you helped pay any closing costs for the buyer.
  • 1099-S Tax form
    You will need to report any proceeds you make after your capital gains exemption to the IRS. This is the form you’ll fill out.

Tips for the final signatures:

Save time and stay home with an eClosing.
States are developing options like remote online notarizations and electronic documents to create a more efficient, convenient closing for all parties. Some states have fully remote closings, while others have a combination of online documents and in-person requirements. Check your state’s RON status here.

Cash received after closing on a house.
Source: (Alexander Schimmeck / Unsplash)

Step 9: Collect your proceeds!

Once both parties have fulfilled the terms of the purchase contract and signed all escrow paperwork, you’ve made it! Your escrow officer might hand you a check on closing day or you could practice your patience a little longer. It depends on what state you live in:

  • In a wet settlement state, all paperwork must be signed and approved by the closing date so that mortgage funds can be dispersed to the escrow or title company. Because of these strict deadlines, you will usually collect your check on the day of closing.
  • In a dry settlement state, mortgage funds are not distributed until all closing documentation is completed and reviewed by the closing agent, as well as the lender. This allows them to catch any reporting mistakes before funds are distributed to you- which means it can take 24- 48 hours to get paid.
    Dry states include Alaska, Arizona, California, Hawaii, Idaho, Nevada, New Mexico, Oregon, and Washington. All others are wet settlement states.

Tips for payday:

Understand how property taxes are deducted in your area.
If your state charges you property tax annually for the previous year, you’ll have to pay your share at closing. For example, if you close on July 15th and the fiscal year begins in January, your escrow officer will deduct property taxes for January 1- July 14th from your proceeds.

There’s a good chance your lender required you to pre-pay a portion of these taxes monthly and store them in a separate escrow account for safekeeping. So, a few days after the sticker shock of a smaller closing check wears off and your (now former) lender empties out that escrow account, you’ll receive a reimbursement check to make up the difference.

Check with your agent for last-minute housekeeping items.
Turn off utilities in your home, transfer your mail to your new address, and make sure you’re not hanging onto any keys, garage door remotes, manuals or warranties that will be helpful to the buyer. Thank your agent with a great review or a small gift and enjoy the moment! You earned it.

A top agent will get you through each step of closing

Consider the closing of your home sale an opportunity to exercise patience; this is not always a rapid process. But your agent is not going to lead you this far just to take a back seat. They’ve been through hundreds of closings. Count on them to be a great resource, and when it comes to streamlining the process as much as possible — follow their lead.

Header Image Source: (daizuoxin / Shutterstock)

Find a top agent in your area