Basic Steps in a Residential Real Estate Transaction

Selling or purchasing real estate property can be one of the most significant transactions in your life. The information below is a general guide to the basic steps in a residential real estate transaction. Complex issues may arise during a sale, so you should retain an experienced real estate attorney to represent you.

As the seller, your first decision is whether to list your property with a real estate broker. If you decide to do so, you will first need to sign a listing agreement. Although most sellers do not ask an attorney to review the listing agreement, it can be beneficial to do so. The broker will help you establish a sales price, stage and show the property.

Once there is an accepted offer, the seller and purchaser each provide contact information for themselves and their attorneys. Next, the broker provides the attorneys with a memorandum of sale listing all the details in the contract of sale, including the sales price, down payment amount, mortgage amount, and closing date. If there is no broker involved, the parties themselves provide this information to their attorneys.

The purchaser obtains an inspection of the property and any agreed upon repairs are added to the contract. The seller provides his or her attorney with the deed, survey, previous title policy and any certificates of occupancy. Sellers who are unsure if a property has certificates of occupancy for all improvements should request this information from the municipality ahead of time. There is additional documentation needed when the property is a cooperative apartment or condo.

The seller’s attorney will draft the proposed contract of sale and provide it to the purchaser’s attorney.  The two attorneys will engage in contract negotiations. Once they reach an agreement, the purchaser signs the contract and provides the down payment check and then the seller signs. At this point, the seller provides the executed contract to the purchaser’s attorney; this signifies that the parties are “in contract.” The purchaser’s attorney will then order a title report and it is the seller’s responsibility to clear any title issues, as governed by the contract.

In the meantime, the purchaser should work with his or her bank to provide the necessary documentation for a mortgage commitment. Once title is clear and the purchaser’s bank is ready to proceed, the parties can schedule a closing date. The attorneys prepare a closing statement listing the monetary adjustments and checks. The seller’s attorney will prepare the new deed and transfer documents. Finally, all parties (or their attorneys-in-fact) attend the closing to complete the sale.