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If you’re interested in acquiring a property, you’ll likely carry out numerous steps before closing, including touring the asset and making an offer. Once you reach closing, there will be additional details to cover. You’ll want to work with legal counsel as you go through the process to make sure you are protected. Understanding what happens between signing a purchase and sale agreement (PSA) and taking ownership can make a big difference to getting across the finish line smoothly.
Step 1: Engage Legal and Title Teams
Your real estate attorney will work closely with you during this time. Their team will review and negotiate final legal documents, including loan agreements, entity structures, and compliance checks. Meanwhile, a title company or escrow agent ensures that the property has clean title. They’ll check that it is free of liens, disputes, or encumbrances.
This team also coordinates insurance, municipal requirements, and transfer documentation.
Step 2: Execute the Purchase and Sale Agreement (PSA)
Once your offer is accepted, you’ll enter a legally binding PSA. This outlines all key terms of the transaction, including price, deposit, contingencies, and timeline. It’s the blueprint for everything that follows.
At this stage, you’ll wire an earnest money deposit (typically 5–10% of the purchase price) into escrow to show your commitment.
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Step 3: Begin Due Diligence
While you will have likely started this process already, due diligence refers to reviewing every aspect of the property. This can include leases, income statements, environmental reports, zoning compliance, title, and more. You’ll also be overseeing physical inspections, often with a team of engineers, architects, or leasing brokers. The professionals you work with will depend on your strategy.
If you discover red flags like unauthorized units or unresolved violations, this is the time to address them. You can negotiate credits, request fixes, or even walk away if your contingencies allow.
Step 4: Coordinate with Your Lender
If you’re using financing, your lender will require detailed documentation. Be ready to provide tax returns, financial statements, and past deal records. The lender will also order an appraisal and might conduct its own diligence.
Step 5: Final Walkthrough and Adjustments
As closing day approaches, your team will conduct a final walkthrough to ensure the property’s condition hasn’t changed. Any last-minute adjustments like rent prorations or repairs will be reflected on the closing statement.
Step 6: Fund the Deal
Just before closing, and sometimes on the same day, you’ll wire in your equity portion. The lender wires the loan proceeds, and everything flows through escrow. The title company confirms all funds are in place and that every condition has been met.
Step 7: Complete the Closing
Once the deed is recorded and the funds are allocated, the transaction is finished. You officially take ownership—and should take time to celebrate. You’ll also want to make sure you are prepared for post-closing tasks like notifying tenants, updating utility accounts, and executing your repositioning plan.
The more you understand the process of closing, the better prepared and effective you’ll be. Surround yourself with the right legal and lending professionals, understand key milestones, and stay organized. With a solid grasp of what closing involves, you’ll be ready to complete the transaction and start looking for your next opportunity.