Signing the purchase agreement
The purchase agreement is the legal contract outlining the price, timeline, contingencies, and responsibilities of both parties. Once both sides sign, the agreed terms become binding, subject to whatever contingencies are written into the contract.
It is worth reading this document carefully, or having someone review it with you, since it governs everything that happens next, including deadlines for due diligence and what happens if either party does not meet their obligations.
Earnest money and opening title or escrow
Shortly after signing, the buyer typically deposits earnest money with a title company or escrow agent as a sign of good faith. This deposit is usually applied toward the purchase price at closing or refunded to the buyer under certain conditions outlined in the contract.
Opening title or escrow means a neutral third party begins managing the transaction's paperwork, funds, and eventually the recording of the deed. This adds a layer of protection for both buyer and seller.
The due diligence period
During due diligence, the buyer investigates the property to confirm it meets their needs. This can include ordering a survey, researching zoning and permitted uses, checking for environmental concerns such as wetlands or flood zone overlap, and confirming utility availability.
As the seller, you may be asked to provide access to the property or answer questions about its history. Being responsive during this period generally helps keep the timeline on track.
Survey and environmental review
If a new survey is ordered, it confirms boundary lines, easements, and any encroachments. This can sometimes reveal discrepancies from older records, which may need to be discussed and resolved before closing.
Environmental review, if applicable, might range from a basic desktop review to a more involved site assessment, depending on the property and the buyer's intended use. Findings here can occasionally lead to renegotiated terms.
Financing and title objections
If the buyer is using financing, this period also involves their lender's underwriting process, which can add time compared to a cash transaction. Financing contingencies typically give the buyer a defined window to secure loan approval.
The title company will identify anything unusual found during the title search, such as old liens or unresolved ownership questions. As the seller, you may need to help resolve these issues, sometimes with the help of an attorney, before the transaction can proceed to closing.
Closing documents, recording, and proceeds
Once due diligence, title, and any financing conditions are satisfied, both parties sign closing documents, which include the deed transferring ownership and various disclosures required by state or local law.
After signing, the deed is recorded with the county, officially transferring the property. Sale proceeds, minus any agreed closing costs, are then disbursed to you, typically by wire transfer or check from the title or escrow company.
Practical examples
- Imagine a first-time seller who assumes closing happens within a few days of accepting an offer. In reality, the due diligence period alone can take several weeks, depending on what the buyer needs to review.
- Suppose a new survey reveals that a fence line does not match the recorded property boundary. This kind of discrepancy is common and is usually addressed through discussion between the parties rather than derailing the sale.
- Imagine a title search uncovers an old, unreleased lien from a previous owner. Resolving this before closing may take extra time but is a routine part of clearing title.
Seller takeaway
Expect a sequence of steps, not an instant transaction. Staying responsive during due diligence and title review generally keeps the process moving toward a smooth closing.
Submit your lotBuilder takeaway
Clear communication with the seller during due diligence and title resolution reduces delays and helps both parties reach closing with fewer surprises.
Join builder buyer listQuestions to ask before moving forward
- →What deadlines are outlined in my purchase agreement for due diligence and closing?
- →What happens to the earnest money if the buyer exits during due diligence?
- →Will a new survey be ordered, and how might that affect the timeline?
- →Are there any known title issues I should start addressing now?
- →Who is handling closing, and what will I need to sign or provide?
Related reading
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Disclaimer: This article is educational only. It is not legal, engineering, environmental, title, or tax advice. Land rules vary by city, county, state, parcel, and project. Always consult qualified professionals before making decisions about any specific property.