We’re finally very close to the end of this real estate journey. For many people, this is a nerve wracking experience. We have become so accustomed to things happening very quickly in our lives that a 30 day close seems to move at a glacial pace.
What’s taking so long?
Well, there’s a lot of moving parts behind the scenes. This is where we call in The Closer.
In virtually every real estate transaction, the parties agree to use an independent third party to close the deal because of the amount of money that is at stake. That service is Title & Escrow. Technically they are two different things, but most of the time, a single company handles both because they are so intertwined.
The reason it takes about a month to close is because there are a LOT of boxes to be checked by The Closer.
I’ll cover the big ticket items here.
First is Title. Just like your car has a title that shows the VIN number and if there’s a loan on the vehicle, there’s a title for real estate as well. But it’s significantly more complicated than a car title.
The Closer needs to ensure that the title is “clean” before it’s transferred. What does that mean? Let’s look at a few examples. Let’s say that 45 years ago when a house was purchased, the original buyer (Jim) went in on this house with his brother (John). John never lived in the house, he just put money in and he owns 25% of the house. His name was put on the title back in the day.
Since that time, Jim – the brother that lived in the house has passed away and his wife is now selling the house. She may not even know that John ever put money in the house and is on the title.
So now the house that cost $25,000 45 years ago is worth significantly more than that. You can see there could possibly be a dispute when John shows up and now wants several hundred thousand dollars out of this transaction.
There are many other types of things that can show up on the title like easements, shared features with neighbors, and loans taken out against the property. It’s the Title folks job to make sure all of those things are cleared up before close.
The Closer on the Escrow side handles the money. She or he has to work with the current bank that holds the mortgage on the house (if there is one) to get a final pay-off amount down to the day.
Then they work with the lender (if there is one) on the buyer’s side to get those funds placed into the escrow account to be distributed.
The Closer then works with the County to make sure the taxes are paid, other lenders if there was any kind of 2nd mortgage, lien holders, and good old Brother John.
She or he will get all the documents from every one of these sources and make sure it all reconciles down to the penny.
Both sides come in to sign their respective packets of documents, and then on the closing day stated in the contract, the transaction is “Released to Record.”
The entire file is sent to the County Recorder’s Office. The office looks at the file and goes into the County Records and generates a recording number to place the buyer’s name on the official title.
When the Recording Office sends those numbers back, the transaction is done and the seller will get their funds.
Almost all of this happens behind the scenes but it usually takes the full 30 days to get it all prepared.