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Buyer Information
Property ownership is often described as a piece of “The American Dream.” Whether you are a first time home buyer or a seasoned real estate investor, Blackfox Title can assist you in making that dream become a reality. This page is designed to give you some basic information about the process to help you get started for residential real estate closing in Texas.
The Contract
The first step in buying property is locating the property and reaching an agreement with the seller on the terms of the sale. In most situations, buyers should enter into a written agreement with the seller detailing terms of the sale, which is commonly referred to as the “contract of sale” or “contract.” In the contract, the seller agrees to sell the property and the buyer agrees to purchase the property upon the terms and conditions in the contract.
Common terms and conditions include:
- The sale price
- Closing date and location
- Amount of earnest money
- Whether or not a title insurance policy will be provided by the seller
- Who will pay what closing costs
- Who will provide a survey of the property
- Does the buyer have an option period or feasibility period during which inspections will be conducted
- Will the buyer take possession at closing or at some other time
If you are represented by a real estate agent, the agent will probably prepare the contract for you using forms promulgated by the Texas Real Estate Commission. If you do not have a real estate agent, you will need to prepare a contract yourself or make other arrangements. If you need further assistance with this, Blackfox Title can provide you with the necessary contract forms.
A note about appraisals: Many buyers ask if they should obtain an appraisal at the beginning of the process to validate the asking price or sales price. You are certainly welcome to obtain an appraisal if it makes you feel more comfortable, but you should be aware that if you are obtaining a loan, their lender will most likely require that a new appraisal be obtained by the lender. Your appraisal will not be usable by them. For that reason, most sellers and buyers do not obtain a separate appraisal. If you have a real estate agent, they usually will help you determine if a sale price is reasonable based on their records of comparable sales in the area.
The Escrow & Closing Process
The closing process for a real estate purchase begins when the contract and any earnest money are delivered to Blackfox Title. The contract provides a blueprint for the closing and governs the issues that may arise as part of the closing. On refinances, the process is typically initiated when the lender submits an order for a title commitment.
The contract provides directions to Blackfox Title for how to prepare for the closing and governs the issues that may arise as part of the closing. On refinances or loan transactions, the process is typically initiated when the lender submits an order for a title commitment.
What Can You Expect as a Buyer in the Real Estate Closing Process?
Once a contract or order for a title commitment is received, a file is established and assigned to one of our escrow officers. If you are obtaining a title insurance policy, the title to the property is examined through Real Property Records maintained at the County Clerk’s office. This examination provides the basis for our title commitment and ultimately the title policy .
While we are working on the title examination, you should be having your inspections of the property completed. Most buyers will have an inspection of the property done by a licensed inspector who can identify potential issues with the property. Many buyers will also have a termite inspection done by a pest control company. Before arranging for a termite inspection, you might want to discuss this with your lender because some lenders will require a termite inspection as a part of the loan process, and they might order it on your behalf. No matter what inspections you have completed, if your contract provides you a termination option, make sure you have your inspections completed during the option period so that you have the ability to terminate the contract or renegotiate depending on the outcome of the inspections.
When the title examination is complete, a title commitment will be prepared. The title commitment is our “commitment” to issue a title policy on the property following the closing.
Schedule A - Identifies the current record owner of the property and the legal description of the property to be insured.
Schedule B- Identifies aspects or conditions concerning the property such as easements, mineral reservations and restrictions that will be excluded from coverage under the policy.
Schedule C- Identifies requirements that must be met at or prior to closing, such as paying off liens or resolving ownership issues
Schedule D - Identifies disclosures that need to be made on behalf of the title company. Owners, Directors, Officers and Underwriters, along with outlining Title Policy Amounts.
As a buyer, you should be particularly interested in Schedule B of the title commitment because this identifies what matters will not be covered by your title policy. For example, if Schedule B lists covenants, conditions or restrictions on the property, these are items that may restrict your ability to use the property for certain purposes. Our standard practice is to identify only the documents that potentially affect your property in Schedule B. If you desire to review the documents yourself, you may obtain a copy of the documents from the County Clerk’s office or we can provide you copies upon request.
Also, if the seller has an existing survey of the property or if a new survey is being obtained for you, you should closely review the survey to make sure you understand exactly what you are buying. The survey takes the legal description of the property and depicts the location of the property boundaries and the location of all improvements on the property on a plat or map. The survey should depict the location of all easements, fences, building setback lines, encroachments, and overlapping improvements.
It is important that you closely review Schedule B and the survey immediately upon your receipt of them. The contract typically gives you, as the buyer, a limited amount of time to object to any problems shown in Schedule B or the survey. If you do not object (and the problem is not a major problem, such as the house being built on the wrong property), then typically you are bound to buy the property subject to the problem, and it becomes your problem instead of the seller’s problem. For that reason, review the survey and Schedule B carefully.
If Schedule C of the title commitment has revealed a title issue that must be addressed prior to closing, or if Schedule A shows that your seller does not own the property, then your seller should be using this time to cure those issues. Depending on the nature of the title problem, the cure could include anything from obtaining and recording correction documents or missing documents from prior transactions to probating the last will and testament of a previous owner.
Once the inspections are completed and the title requirements are resolved, the buyer, seller and/or lender can contact Blackfox Title to schedule a closing date and time. Several days prior to the real estate closing, we will prepare the documents necessary to close the transaction. For cash transactions, there may only be a handful of documents necessary to close. However, when there is a loan involved, the number of documents required to close the transaction can increase significantly. Please note that if a lender is involved, we cannot prepare any of the closing documents until we receive closing instructions and documentation from the lender. The documentation related to a loan varies greatly depending on the lender and the type of loan you are obtaining.
In every closing, one of the most important closing documents is the Settlement Statement, HUD-1 form, or Closing Disclosure that is prepared by Blackfox Title pursuant to the instructions of the lender, the contract between the parties, invoices received for services provided (i.e., pest inspections or surveys), and the instructions of the parties or their realtors. The Settlement Statement identifies all of the costs related to the transaction and explains who will pay for each item. It also establishes the dollar amount that each party will receive or pay at closing. On transactions involving a loan, the Closing Disclosure must be submitted to the lender and approved before the closing can take place.
Following Closing Disclosure approval, the parties and, if applicable, their realtors will meet at offices of Blackfox Title on the day and time scheduled for the closing. Typically one hour is allotted for each closing, with the seller generally having fewer items to complete than the buyer. In transactions not involving an institutional lender, the closing will often take less than the allotted time. The closing is a time to sign all of the required documents, to make any last-minute adjustments to the documents, and to answer any final questions the parties may have. If buyers and/or sellers are unable to attend a scheduled closing, alternate arrangements can be made for the use of a power of attorney or the mailing/emailing of documents. If such arrangements are necessary, please alert Blackfox Title and your lender as early as possible in the process (and at least two days before the closing) so that we may plan accordingly.
Please note that if you are paying money at closing, any amount over $1,500.00 must be certified funds such as a cashier’s or certified check or an electronic wire. This is not a particular rule of our title company, but is a regulation mandated by the Texas Department of Insurance. All checks or money orders should be made payable to Blackfox Title. Wiring instructions will be given before closing.
Immediately following the residential closing in Abilene, Texas, and commercial closing Blackfox Title’s funding department will provide scans of the documents deemed by the lender to be “funding conditions.” The lender will review these documents and authorize the funding of the transaction. This process typically takes 3-4 hours after closing, but with some lenders could take several days depending on the specific circumstances surrounding the loan. When funding authorization is received, Blackfox Title will pay all invoices associated with the transaction, pay the seller’s lender (if necessary), release any proceeds that are payable to the buyer or seller, record all relevant documents at the appropriate courthouse, and in general finalize the transaction. Proceeds can be picked up, mailed, electronically wired and, in certain cases, deposited directly into checking or savings accounts based on instructions provided by the parties at closing. Usually it is at this point that the deal is officially closed and ownership and possession of the property is transferred from the seller to the buyer.
Within several weeks of the closing, the title policies associated with the transaction are issued and sent to the appropriate parties. Also, the original documents are forwarded to the buyer, seller or lender by the County Clerk’s office after they are recorded.
Closing Tips
- Expect, on average, a 3-4 hour delay after closing before the transaction is funded and finalized. For this reason, schedule the closing for early in the day if you hope to get the keys and possession of the property the same day.
- When you, your lender and the seller are ready to close, call the title company to schedule a closing date and time. We will not schedule the closing until you let us know that you are ready.
- If you would like the title company to wire or direct deposit the proceeds of your sale, make sure to bring a deposit slip, voided check or the routing number and account number for your bank account
- If the property you are selling has been your primary residence for two out of the last five years (and has not been used for business purposes), you will probably not have to pay any income or capital gains tax on the sale of the property.
- Many people tend to schedule closings at the end of the month and on Fridays. Avoiding these time periods can result in more available closing times and more availability of your lender, realtor, moving company, etc.
- Once you are under contract, it is important to stay in close contact with your lender. This can be a good way to keep the process moving and to make sure that any special requirements the lender may have been taken care of.
- If you are bringing more than $1,500.00 in funds to closing, the title insurance rules require you to bring a cashier’s check or money order or arrange for a wire to the title company in advance. Personal checks cannot be accepted for more than $1,500.00.