Understanding the Real Estate Closing Process
By Mike Fish, Broker –
Minnesota Real Estate & Management
The closing process is one of the most common topics buyers and sellers ask me about. Some feel overwhelmed. This article breaks down the process step-by-step and highlights some of the most important things to know along the way.
- It Starts With an Accepted Offer
Everything begins when a buyer submits an offer and the seller signs it. Once both parties have agreed:
- The fully executed purchase agreement is sent to a closing company.
- Buyers and sellers are free to choose any closing company they’d like, though most experienced agents will recommend reputable ones they trust.
- A good agent will also prepare a net sheet for sellers so they can clearly understand their bottom line before accepting or submitting an offer.
- Earnest Money
After the offer is accepted:
- Earnest money is typically due within 48 hours.
- The closing company receives the purchase agreement and holds the earnest money in accordance with the contract.
- Inspection Period
The inspection is one of the biggest contingencies in the process. In most cases:
- Inspections are scheduled and completed within the first week.
- Buyers can either accept the property, cancel the purchase, or attempt to renegotiate.
Personally, I strongly encourage pass/fail inspections on both the buying and selling side. Too often, buyers use the inspection not for safety issues, but as a chance to renegotiate after tying up the property and eliminating competing buyers. Pass/fail inspections keep the process cleaner, faster, and more honest for everyone involved.
- Financing & Appraisal
Two additional major contingencies are tied to the loan:
Financing
I always recommend buyers work with a local lender they trust—especially for lake homes. Local banks understand the area, the lake markets, and the nuances that national lenders often struggle with.
Appraisal
The appraisal is essentially the anchor of the entire loan.
The bank orders it to confirm the property is worth what the buyer has offered. If it comes in low, there are still options to save the deal, but it does require strategy and communication between agents, lenders, and the closing company.
- Title Work & Closing Prep
While financing is progressing, the closing company is:
- Running title work
- Checking for easements, encroachments, liens, or legal issues
- Preparing the closing documents
I also highly recommend title insurance for buyers. It provides an important layer of protection against unexpected title problems down the road.
- Final Steps Before Closing
Once the appraisal is complete and the lender gives the green light to fund the loan:
- The closing company schedules the official closing date.
- Buyers and sellers review their documents.
- A final walkthrough is completed—usually within 24 hours of closing.
- Funds are transferred, documents are signed, and keys are exchanged.
At that point, the deal is finalized.
- Why Having the Right Team Matters
Real estate transactions can look simple on paper, but there are many places where things can go sideways. That’s why it’s essential to have:
- A knowledgeable broker or agent
- A reliable closing company
- A responsive loan officer
- Clear communication between all parties
A good agent stays in constant contact with the lender and the closing company from start to finish. That communication is the difference between a smooth 30-day closing and a frustrating delay.
How Long Does Closing Take?
During the peak market, closings were pushed out longer due to volume and processing delays. Today, most closings are back to around 30 days, depending on the loan type and inspection schedule.
To be safe, many contracts are written for on or before 45 days, but we’re seeing more and more closings tighten back up again.
Final Thoughts
The closing process doesn’t have to be stressful. With the right team and a clear understanding of each step, your transaction can be smooth and predictable.
If you’re buying or selling and would like to discuss how we handle the process at Minnesota Real Estate & Management, I’d love to help.
Reach out anytime with questions.
— Mike Fish
Minnesota Real Estate & Management
