The closing process is the final step in transferring property ownership, during which the buyer and seller sign documents, funds are exchanged, and the new deed is recorded. Buyers typically pay closing costs—fees and expenses that include lender charges, title insurance, recording fees, and taxes—at this stage. To protect both parties, an escrow arrangement places funds and documents with a neutral third party until all conditions of the transaction are met. Many buyers also place earnest money in escrow as a deposit demonstrating good faith intent to purchase. After closing, lenders conduct an annual escrow analysis to ensure that the escrow account holds enough to cover upcoming taxes and insurance.
Most purchase contracts include contingencies—conditions that must be met for the contract to become binding. An inspection contingency gives the buyer the right to cancel based on inspection findings, while a financing contingency allows cancellation if the buyer cannot secure a mortgage. If repairs are required, the parties often create a punch list of items to be addressed before closing. Buyers typically have 30 to 60 days from an accepted offer to complete due diligence and reach closing. Property due diligence typically includes a review of the title, a survey showing the boundaries and improvements, and a range of physical inspections. A home inspection is a non-invasive examination of the property's overall condition, while specialized inspections may be performed for termites and other wood-destroying pests, radon gas (which can cause lung cancer), or sewer line conditions through a camera-based sewer scope.
Negotiation between buyers and sellers centers on price and terms. The asking price is the seller's listed price, while the sales price is the final agreed-upon amount. A counteroffer modifies the original offer and becomes the basis for further negotiation. In competitive situations, multiple buyers may compete for the same property, leading sellers to request "highest and best" offers by a deadline. Buyers may include an escalation clause, which automatically raises their bid above competing offers up to a specified cap. Sellers may also offer seller concessions, paying certain costs—such as closing costs—on behalf of the buyer.
Sellers are typically required to provide disclosures—information about known property defects—although the doctrine of caveat emptor ("let the buyer beware") means the precise rules vary by jurisdiction. Because real estate transactions are complex, high-stakes, and prone to costly mistakes, many buyers and sellers work with a real estate attorney to review contracts, handle negotiations, and protect their interests throughout the process.