purple, orange, and white blog title graphic "What Happens During a Real Estate Transaction?"

What Happens During a Real Estate Transaction?

March 20, 2024

As a real estate agent, it’s important to know the ins and outs of a real estate transaction from when a property goes on sale to when the deal closes. Whether you’re an expert agent or you’re just learning the ropes of a transaction, here is a step-by-step process of what happens during a real estate transaction.

What is a Real Estate Transaction?

If you’ve been in real estate for a long time, or you’re studying to pass the exam to earn your license, the idea of a real estate transaction has many moving parts. In a nutshell, a real estate transaction is when a seller offers their home for sale and then a buyer agrees to purchase that property. 

Who Takes Part in the Transaction?

In a real estate transaction, the following six people move the process along 

  1. Realtor
  2. Bank, Financial Advisor, Mortgage Lender (provides loan to buy your first home)
  3. Home Inspector 
  4. Home Appraiser (identifies how much the house is worth)
  5. Title Company (reviews public records for legal efforts)
  6. Insurance Agent 

If you’d like help with your real estate transaction, coordinators can also be a part of the process. Once the selling process begins, enlist us with all of your administrative tasks and questions. 

The Steps of a Real Estate Transaction

purple, orange, and white graphic "Steps of a Real Estate Transaction"

List a Home or Make an Offer

You, (the real estate agent), will make the property available for the seller by listing it for sale on different services like Zillow, Houzeo, RE/MAX, and other MLS sites. Or, if you’re working for the buyer, you will help your client look through these sites to make an offer on a property. 

Collect Signatures 

This is where the agreement process begins. Nowadays, it’s normal for agents to collect signatures electronically. However, some still do use paper forms. 

Open Escrow

A listing agent will open an escrow account (legal holding account) with a third party who holds all the money and contracts for the transaction until the sale closes. Some agents use attorneys while some seek out a specific escrow office. 

When a seller accepts a buyer’s offer, that buyer is responsible for paying a deposit for the down payment. 

Have Home Inspection 

A licensed home inspector will review a home’s condition to ensure that it meets the county or state’s code requirements. If there are repairs needed, negotiations will take place between the seller and buyer to decide whether the seller will offer funding for these repairs. Inspectors also look out for insects like termites, that can cause damage to the property.  

Perform the Title Search

This is another type of search, where attorneys, titles, or escrow officers examine records so that the home can be transferred to a new buyer. 

Get Home Appraised 

In this final inspection, the home’s value will be determined. This prevents buyers from overpaying for a home that might be worth a lower cost. 

Secure Insurance and a Loan

Buyers need to prove they can financially take out a loan or borrow money to pay for the home. The best way to do this is through a pre-authorization letter. Once it has been approved by the seller, the next steps will be to secure approval for a mortgage and homeowner’s insurance.

Notarize Documents

All documents will need to have a signature by a notary signing agent. These officials are present to detect and deter any type of fraud possible. 

Perform Compliance

Before the deal is sealed, the property has to meet all of the rules and regulations so it prevents the new homeowners from any sort of financial risk. 

Real estate compliance violations include the following:

  • Trust fund violation
  • Unlicensed activity 
  • Misrepresentation of facts 

Here is where a transaction coordinator comes into play. We can help smooth out the process by looking over and validating documents so both parties can close the deal.  

Close the Deal

You’ve made it to the final step, congrats! During a closing, a title company or attorney prepares documents so that the deed can be transferred to the buyer. Funds will also move to the seller if the buyer’s mortgage is approved.

Usually, the buyer will do a final walkthrough to check that all repairs have been completed. If all goes well, the deal is closed, and the real estate transaction is done.  

Because there are many moving parts to a real estate transaction, here at Simpliyfr, we will help make the process faster and easier.