In this article...

Watch Our Video
Matt Hector

Selling your home is a major project—prepping for showings, the showings themselves, packing, and moving. Without a successful closing, none of that effort matters. Having an effective team behind you can help ease the hassle of selling your home. It’s also important to know the ins-and-outs of the process before you start. Knowing what to expect is better than being surprised. This guide is designed to give you the information you need to prepare for the process.  

How Do I Pick A Real Estate Broker?

Choosing the right real estate broker is important. This is the person who will be marketing your home for sale, showing it, getting you to an offer, and working with you during the closing process. By the time most sellers hire a lawyer, the purchase price is already set. You need a broker that makes you comfortable. You also need a broker that knows the local market. Your broker should work full-time. You may know someone who fits the bill. But, don’t fall into the trap of hiring friends or family for that reason alone. You are selling what may be your most-valuable asset. Treat it like a business transaction. It is.

It might be a good idea to ask a potential broker to show you a few properties. Get a feel for that person’s selling style. Look at homes that are similar to yours—this can give you an idea of how they will market your home. Ask questions about the area and how homes are selling. Ask as many questions as make you feel comfortable. After all, you are interviewing someone for a job.  

When Should I Hire A Real Estate Attorney?

Many people wait until they have accepted an offer before retaining a lawyer. Generally, there’s not much work for a lawyer to do before then. However, if you have liens against your property or major defects that you’re aware of, then having a lawyer as early as possible makes sense. Selling a home requires giving clear title—you can’t close without it. Being ahead of the game can save headaches as the closing date approaches.

How Do I Choose A Real Estate Attorney?

A good seller’s attorney will, at bare minimum, be a title agent for a local title company. Some people prefer larger, national title companies. Some prefer smaller, local ones. Often, the smaller title companies issue policies that are underwritten by the larger companies. Most of the time, parties use the title company that the seller’s attorney uses. Good title insurance companies give their attorney agents valuable customer service that can make the difference between a smooth closing and a disastrous one.  

You want a lawyer that you are comfortable with as well. Your attorney is going to be the one protecting your interests. Again, you are selling what is likely your most-valuable asset. Don’t be a newly-minted real estate lawyer’s first seller’s-side closing. Unless you’re someone who regularly buys and sells homes, you don’t want to be someone’s guinea pig.  

What Happens When I Get An Offer?

Getting an offer on your home is exciting news. Sometimes, it is as simple as accepting the offer and moving towards closing. Other times, you may have more than one offer. Taking the highest offer isn’t the only answer to multiple offers. Did one potential buyer already mention that they wanted repairs done prior to purchase? What kind of loan is the buyer attempting to get? An offer doesn’t mean that the deal will close, nor does it mean that the buyer will be approved for a loan. Your broker should be able to help you choose. The best offer that is most likely to close is the goal.  

What Kinds Of Financing Are There?  

There are different types of mortgages on the market. Some may have specific lending requirements that could affect your closing slightly. Conventional loans are the majority of the loans that you will see. These are your standard mortgage loans. They tend to have very few, if any, special conditions tied to them.  

On the other hand, some federally backed loans may have more stringent requirements. For example, Veteran’s Administration or HUD-backed loans may require that specific repairs be made to a home before the loan can be issued. If an issue with a property might render it unsafe or uninhabitable, VA and HUD lenders will likely require that it be fixed. This can cause some unexpected expenses during the closing process. A high dollar offer can become a much smaller bottom line as repairs add up.  

What Happens When An Offer Is Accepted?

Once an offer is accepted, the contract enters dual attorney review and property inspection periods. This is when most sellers hire an attorney. The attorney review period allows both attorneys to review the contract and request any changes or modifications to it. Buyers will also schedule a property inspection. Based on the results of the inspection, most buyers will submit a list of requested repairs to be made before closing. This request must be submitted before the property inspection period expires. Typically, parties will agree to extend that period in order to reach an agreement. If they cannot, the parties are able to cancel the deal.

Deals have been lost during this period because the parties couldn’t agree on repairs. In some deals, the repairs required by a FHA or VA lender are too extensive to be feasible. Some buyers will ask you to fix everything identified in the inspection report, no matter how minor. Even if the buyer is purchasing the home “as-is,” they may still have the property inspected to identify any major defects in the home. It’s not unusual to meet the buyer in the middle on repairs. In many situations, offering a credit towards the closing costs will solve the problem to the buyer’s satisfaction.  

Once the attorney review and inspection periods are complete, the deal is ready to move forward. The buyer will be working with their bank to finalize their loan. Your real estate attorney will be working with their title company to ensure that you can convey clear title.  

How Does My Real Estate Attorney Clear Title To My Home?

When you sell your home, you must provide clear title. This means that you can guarantee that nobody else but you has any potential claim to the property. Banks won’t lend money for a property that isn’t being sold free and clear.  

First, your attorney will submit your contract to their title company to run a title search. The title company will give the lawyer a search package. Your attorney will review the package and identify any liens or other issues with title. If you have a mortgage, then it will be recorded against your home. It has to be paid off and released to complete the sale. Other issues may include judgments that are recorded against your property, mechanic’s liens, tax liens, and unreleased prior mortgages.  

What kinds of liens are there?  

If someone has obtained a money judgment against you, they may have recorded it against your property. In order to have the lien removed, you’ll have to deal directly with the judgment creditor. Normally, this will involve paying the judgment in full.  

A mechanic’s lien is placed against a property when a contractor has done work on the property that hasn’t been paid for. These kinds of liens are subject to a foreclosure process, so they absolutely must be resolved before sale. While it is possible to fight the lien itself, many sellers find themselves in a position where they have to pay the contractor to have the lien removed.  

Tax liens are exactly what they sound like—liens related to unpaid taxes. Unpaid federal taxes can result in the IRS placing a lien against your home. That’ll be getting paid back before you can sell. Unpaid property taxes can be sold to third parties. They can, after time, get a tax deed to the property. In order to provide clear title, you’ll have to pay your back taxes.  

In some of these situations, your lawyer may be able to negotiate a solution for you. Keep in mind that these are liens against your biggest personal asset. The lien holders know it. Your leverage is limited in this scenario. A solution that allows you to sell the house is your goal.  

What happens after the title search?  

Once your attorney has identified any potential liens against your property, they must also identify any other “exceptions” that need to be raised on the title insurance commitment. Exceptions are conditions that are not covered by a title insurance policy. The point of title insurance is to insure the chain of title to a home. “Clouds” on title are liens and other conditions that interfere with ownership of property. For example, if the power company has an easement to run lines across your land, that easement is an exception to the title policy. Some properties are in special service areas that have special taxing districts.  

All of these items will be listed as exceptions to the insurance policy. Some, like liens, have to be cleared before closing. Others, like easements, exist regardless of who owns the property. Some exceptions will be related to transfer requirements. The state and county charge transfer taxes for selling property. Some municipalities require you to purchase transfer stamps, obtain final water bills, and other clearances. Your lawyer will identify what’s needed and let you know.  

What Is The Buyer’s Role Before Closing?

While your real estate lawyer is clearing title and preparing the necessary documents, the buyer is usually working on obtaining a mortgage. Your attorney will want to stay in contact with the buyer’s attorney. There are deadlines for the buyer to obtain a mortgage commitment. If the buyer can’t get a commitment by a specific date, then they must provide notice to get out of the deal. Failing to provide notice on time can result in the buyer surrendering their earnest money to you if they cancel the deal. It’s not unusual for banks to take longer than expected to finish processing a loan application. Buyers will request extensions on the loan commitment deadline when things are taking too long.  

What Will It Cost To Close, Or, What Is My Bottom Line?

Selling a home is expensive. Your real estate lawyer has to prepare the closing statement to ensure that costs are paid properly. The real estate brokers take their commission, typically 5-6%, off of the top. County and state transfer taxes must be paid. All of the work that goes into the title search and commitment costs money. The seller purchases a buyer’s title insurance policy. There are tax prorations that are credited to the seller for unpaid property taxes. The payoff of the existing mortgage and any other liens must be accounted for.  

In many cases, the final bottom line figure won’t be 100% certain until a few days before closing. If you are selling your home and using the proceeds to buy a new one, then plan carefully. Narrow margins can lead to nasty surprises. Also, if you are scheduling a sale and subsequent purchase back-to-back, be sure that your real estate attorney has the wire instructions for the title company where your purchase is closing—you’ll want the funds sent there directly.  

What Happens At The Closing?

Hopefully, as little as possible. Some sellers sign the deed, bill of sale, affidavit of title, and a power of attorney so that their lawyer can attend the closing alone. Some choose to attend. If everything goes smoothly, then the buyer’s lender will fund the transaction. Once the money is in the title company’s account, checks are cut. Typically, the real estate brokers and the lawyers will receive checks from the proceeds—they get paid as part of the transaction. You’ll also leave with a check, assuming that your bottom-line figure was greater than zero.  

O’Flaherty Law understands the complex process of selling a home in Illinois. Our real estate lawyers have years of experience on the buy and sell side. We can prepare you for the expected and unexpected issues when buying a home.  

Call our office at (630) 324-6666, email, or schedule a consultation with one of our experienced real estate lawyers today. You can also fill out our confidential contact form and we will get back to you shortly.  

Disclaimer: The information provided on this blog is intended for general informational purposes only and should not be construed as legal advice on any subject matter. This information is not intended to create, and receipt or viewing does not constitute an attorney-client relationship. Each individual's legal needs are unique, and these materials may not be applicable to your legal situation. Always seek the advice of a competent attorney with any questions you may have regarding a legal issue. Do not disregard professional legal advice or delay in seeking it because of something you have read on this blog.

FREE Real Estate LawE-Book

Get my FREE E-Book

Similar Articles

Learn about Law