Sell My House Closing Process and Legal Documents 2 — Questions and Answers
Question 1: What is 'escrow' in a real estate transaction?
- The buyer's down payment savings account
- A neutral third-party arrangement where funds and documents are held until all closing conditions are met (Correct answer)
- The seller's share of the commission
- The bank's underwriting process
Correct answer: A neutral third-party arrangement where funds and documents are held until all closing conditions are met
Escrow is managed by a neutral third party (title company or escrow company) that holds money and documents and disburses them only when all contract conditions have been satisfied.
Question 2: What is 'earnest money' in a home purchase?
- The buyer's full down payment paid upfront
- A good-faith deposit by the buyer held in escrow to demonstrate serious intent to purchase (Correct answer)
- A non-refundable fee paid directly to the seller at signing
- A fee the seller pays to hold the listing price
Correct answer: A good-faith deposit by the buyer held in escrow to demonstrate serious intent to purchase
Earnest money is a deposit (typically 1–3% of the purchase price) that shows the buyer is committed to the transaction and is held in escrow until closing or a contract dispute.
Question 3: Under what circumstances can a buyer typically get their earnest money back?
- Never — earnest money is always non-refundable
- Only if the seller refuses to close
- If the buyer exercises a valid contract contingency (financing, inspection, appraisal) within the allowed timeframe (Correct answer)
- Only if the home fails its final walk-through
Correct answer: If the buyer exercises a valid contract contingency (financing, inspection, appraisal) within the allowed timeframe
Earnest money is refundable when the buyer cancels within the terms of a valid contingency, such as failing to get financing approval or unsatisfactory inspection results.
Question 4: What is a 'deed' in a real estate transaction?
- The mortgage agreement with the lender
- The legal document that transfers ownership of property from seller to buyer (Correct answer)
- The home inspection report
- The purchase and sale agreement
Correct answer: The legal document that transfers ownership of property from seller to buyer
A deed is the legal instrument that conveys title (ownership) from the seller (grantor) to the buyer (grantee) and must be recorded with the county to be legally effective.
Question 5: What is a 'seller concession' in real estate?
- When the seller reduces the list price
- When the seller agrees to pay a portion of the buyer's closing costs as part of the deal (Correct answer)
- When the seller leaves appliances for the buyer
- When the seller extends the closing date
Correct answer: When the seller agrees to pay a portion of the buyer's closing costs as part of the deal
Seller concessions are contributions toward the buyer's closing costs that are negotiated into the contract, often used to help buyers manage upfront cash requirements.
Question 6: What is a 'final walk-through' in a home sale?
- The home inspector's last review before closing
- A buyer's pre-closing visit to verify the home's condition and that agreed repairs were completed (Correct answer)
- The title company's on-site inspection
- The seller's final review of the listing photos
Correct answer: A buyer's pre-closing visit to verify the home's condition and that agreed repairs were completed
The final walk-through typically occurs 24–48 hours before closing and gives the buyer a last chance to confirm the home's condition, verify repairs, and ensure nothing has changed since the contract was signed.
Sell My House Closing Process and Legal Documents 2
What is 'escrow' in a real estate transaction?