Everything you need to know to build a real estate transaction process from contract to closing. Flow Charts, Checklists, Definitions and More.
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A real estate transaction flow chart is a tool that can help a person understand and visualize every aspect of the real estate transaction process.
There are numerous moving parts to any real estate transaction, and numerous roles responsible for completing the various aspects to the workflow. Let's take a look at the main roles covered in a real estate transaction process flow chart.
For a real estate professional, having a clear picture of the roles each of these people can play is a huge advantage in understanding the overall process. The process flow chart breaks down the responsibilities the agent has to each of these roles. The real estate transaction process flow chart also looks at the different steps of the process including:
Having a single place to visually see what goes into each step can be invaluable. It easily lays out the responsibility for the agent, and makes it simple for them to explain to the buyer and seller what is needed and expected to get the closing brought about as smoothly as possible.
Similar in some ways to the real estate transaction process flow chart, a real estate transaction checklist allows a person to break down the steps that go into a process and view them individually as a list. The checklist can easily integrate with the flow chart, so long as the processes match. The checklist is a great tool for monitoring the situation on the ground and in real time. It is easier to line it up with direct situations as they are happening than in the case of the flow chart, and being able to cross off items is useful as well.
Check out this awesome video from Tim Brooks for even more helpful information about this flowchart.
Buying and selling real estate isn't like the buying and selling of other things. Real estate is considered real property, and there are specific laws that govern how it may be bought and sold. This is why it is so important to properly follow a real estate process. For a seasoned real estate agent process might seem second hand, but for a buyer and seller, the process can seem overwhelming.
Every real estate transaction will have a buyer and seller. Some will also have a lender. To be completed, the real estate transaction must generally include the following parts:
Often there is overlap of the phases. For instance, a buyer will often begin financing before due diligence is complete.
A piece of real estate cannot simply be bought and sold, but almost in all circumstances these phases must be adhered to in order to properly complete a real estate transaction.
With all of the complexities that go into completing a real estate transaction, an enormously useful tool is real estate transaction management software. This allows agents a simpler way to manage transactions, through each phase, allowing them to provide better service to both buyers and sellers, and eliminating any inefficiency caused by disorganization of transaction management.
A real estate transaction timeline template is a good way to visualize all that an agent must keep track of for each transaction. It is one thing to do that for a single transaction, but once multiple transactions are introduced, management of all the phases becomes extremely complex.
Real estate transaction management services help by creating a centralized database in which to view all transactions. Additionally, the job of monitoring where in the process each transaction is automated.
There are few tools better equipped to easily free agents to spend more time directly with clients, boosting sales and productivity while also increasing customer satisfaction overall. For buyers, they can feel assured that every step of their journey towards purchase is being properly managed, especially as overall communication improves. Sellers will have a smoother path to closing.
When we've discussed real estate transactions previously, we've been primarily referring to residential transactions. The commercial real estate acquisition process has its own specifications which greatly impacts the overall process. This is why it can be so useful to employ a specific commercial real estate closing checklist.
In general, the commercial real estate transaction checklist differs from the standard one because it takes into account additional factors. This includes a much more extensive due diligence phase. This is because in addition to the standard inspections and property valuations, the property must be examined for zoning. Code violations must also be examined carefully. Valuing the property is also more complex and even more critical to success than just the average appraisal. Also, ownership of commercial property is oftentimes more complex than with residential property, meaning this must be fully verified before a transaction can be completed.
Additionally, the financial phase can also be much more drawn out as the lending can be a great deal more complicated than with residential, as can purchasing proper insurance.
While overall the phases are the same, a commercial real estate closing checklist provides you with the specifics you need to complete a commercial transaction.
To a first time seller, the real estate selling process can easily seem overwhelming. But by looking at a home selling process flow chart and breaking down the different parts of the real estate sales cycle, it's much easier to understand.
The amount of time it can take is highly variable. To complete a sale, a seller will also need a buyer, and most often will choose to work with a real estate professional. They will have direct contact with a listing agent. Even if they choose not to work with a real estate professional, and are For Sale By Owner, they may still need to work with a buyers agent.
During the listing period of the real estate sales cycle, the seller will work with the agent to determine a sales price. This is often greatly determined by comparables. From here, it is generally the agent's job to get the word out, including listing it on MLS, sharing with other brokers, and marketing and advertising.
Negotiations occur after a purchase offer has been received. During the contract period the buyer will be carrying out due diligence inspections and finalizing finances. For the seller, closing procedures are the final stage. The seller needs to be out of the house by the time of closing unless other arrangements have been made.
For the buyer, the real estate listing process is less relevant. They will likely depend on a buyers agent to keep track of new listings that fit what they are looking for. The real estate buying process can be broken down into the following stages:
During the shopping phase, a buyer may commit to working with a real estate professional, known as a buyers agent. A real estate buyer transaction checklist is a useful tool for managing the real estate buying process from start to finish.
Once finding a place for purchase an offer is made, and negotiation commences with the seller, through the designated professionals.
The contract period is much more active for the buyer than the seller. It includes the due diligence of having all inspections, as well as getting insurance and an appraisal in order to finalize financing. All of this must occur before closing and the real estate transaction is finalized.
The final stage of a real estate transaction is the real estate closing process. This is what completes and finalizes the transaction.
Oftentimes, an important part of the real estate closing process, is the mortgage closing process. If the buyer is using any financing, the mortgage closing process must be done at the same time as the real estate closing process. This requires that the lender be fully updated on all relevant aspects leading up to the closing.
A real estate closing checklist template can be an invaluable tool in managing all aspects of the closing to make certain it all comes together seamlessly. There are numerous steps that go into the closing process, and the closing itself can take an excessive amount of time if everything is not in order. A well run closing can be completed in under an hour. However, it is possible for a closing to drag on when important documents are missing or not in order.
At the closing all of the money is exchanged for the title, and the buyer takes full possession of the property. Additional aspects of the real estate closing process include having properly conducted the title search as well as the purchase of insurance. Proof of this, along with valid inspections and appraisals may be required for financing to go through at the closing.
July 5, 2023
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