Real Estate In Tennessee

Residential Transactions

Residential transactions may be the most common, However they should never be viewed as common. Every transaction has its own unique components.

Every state has their defined laws, standards, and practices for a residential real estate transaction. Many are common between states, however there may be nuancies to how they are implemented or even unique to that particular or region. One of the primary resons to engage with a Real Estate Professional is knowledge and expertise.

The three most common types of residential transactions are Existing Homes, New Construction and Multi-Tenant properties. Each type of property requires a good understanding of the risks and challenges. Failure to understand the details could cause you to loose the deal, or worse, loose thousands of dollars.

A residential real estate transaction involves several key components that both buyers and sellers need to navigate. Here are some of the most common components:

• Listing and Marketing: The seller lists the property for sale. This involves preparing the property for showings, taking photographs, and creating marketing materials.
• Buyer Interest and Viewing: Potential buyers express interest in the property and schedule viewings to assess its condition, features, and suitability.
• Offer and Negotiation: A buyer makes an offer to purchase the property. This offer includes the proposed purchase price, contingencies (conditions that must be met for the sale to proceed), and other terms. The seller can accept, reject, or counter the offer. Negotiations may go back and forth until both parties agree on terms.
• Purchase Agreement: Once the buyer and seller agree on the terms, a purchase agreement (also known as a sales contract) is drafted. This legally binding document outlines the terms of the sale, including the purchase price, contingencies, closing date, and more.
• Earnest Money Deposit: The buyer typically provides an earnest money deposit as a show of good faith. This deposit is held in escrow until the transaction is completed and is credited toward the purchase price.
• Inspections: The buyer often arranges for inspections, such as a home inspection, to assess the property's condition. If issues are identified, negotiations may resume to address repairs or adjust the purchase price.
• Appraisal: The buyer's lender usually orders an appraisal to determine the property's market value. This step is crucial for securing a mortgage, as the lender wants to ensure the loan amount is justified by the property's value.
• Mortgage and Financing: If the buyer is obtaining a mortgage, they will work with their lender to secure financing for the property. This involves submitting documentation and meeting the lender's requirements.
• Title Search and Insurance: A title search is conducted to ensure the property's title is clear of any liens or ownership disputes. Title insurance is often purchased to protect against any unforeseen title issues.
• Contingency Period: The purchase agreement may include contingencies (e.g., financing, inspection) that must be satisfied within a specified timeframe. If contingencies aren't met, the buyer may have the option to withdraw from the transaction.
• Closing Documents: Prior to closing, both parties review and sign various legal documents, including the final settlement statement (HUD-1 or Closing Disclosure), which outlines the financial details of the transaction.
• Closing: During the closing, the parties involved gather to complete the transaction. The buyer provides the funds required to purchase the property, and the seller transfers ownership. The deed and other necessary documents are signed, and funds are distributed to the appropriate parties, including real estate agents, lenders, and escrow companies.
• Recording and Ownership Transfer: The deed and other relevant documents are recorded with the appropriate government office, officially transferring ownership from the seller to the buyer.
• Possession: The buyer takes possession of the property as agreed upon in the purchase agreement. This could be immediate or occur at a later date.
• Post-Closing: After the transaction is complete, various administrative tasks might be necessary, such as updating utility accounts, notifying local authorities of ownership changes, and addressing any remaining contingencies.