Sellers' steps to closing

An overview to help you stay on track and in control of your sale

Selling a home in Chicago and the surrounding suburbs can be a complex process. Understandably, most sellers focus efforts on staging and marketing the property to find a buyer. And while getting an offer might feel like the endgame, it’s only the midpoint to finalizing the sale and handing over the keys.

Once you sign a contract, things move quickly. It’s like running a gauntlet as the buyer adds hurdles, threatens to back out, and/or tries to change the contract. In short, it can get messy.

Key takeaways: Before you sign anything, here’s our best advice for home sellers:

Eliminate the buyer’s chances of backing out. Understand how the process works and what is expected of you, then deliver on those expectations as quickly as possible.
Hire the best real estate attorney you can find to help close your contract. The right lawyer will help ensure you are protected and well-informed at every step. They can also keep all stakeholders on task to get to the closing table on time.
Know that every transaction is unique.

That said, here is our overview of the seller’s steps to closing. Keep scrolling or click to jump to a subject.

Step 1. Pre-contract

Who prepares the offer and how?

The buyer typically prepares the initial offer with their real estate broker or attorney. If you or your buyer are not working with a broker, we recommend having an attorney review your offer before you sign.

There are two standard forms commonly used for purchase and sale transactions in Cook and the surrounding counties:

The “CAR” Chicago Association of Realtors Residential Real Estate Purchase and Sale Contract
The “Multi-Board” Residential Real Estate Contract

There are other standard forms in circulation, but the CAR and Multi-Board are the most common. If a buyer submits a different form, be extremely cautious and have your attorney look at it. Learn more here.

The CAR and Multi-Board standard forms

The CAR form is typically four pages long but there are variants for different types of property (homes, condominiums, apartment buildings, etc.). Several approved riders are available to customize the terms.

The Multi-Board form is 13 pages long. It includes optional provisions, which require different variants and fewer standardized riders.

Significant differences between the Multi-Board and CAR:

Cancellation

The Multi-Board form gives the buyer’s and sellers’ attorneys the unilateral right to, in good faith, flat-out cancel the transaction by disapproving the contract during attorney review. The CAR form allows either attorney to cancel the transaction, but only if an agreement cannot be reached on any attorney-proposed changes. The CAR form only allows attorneys to propose changes to the contract and then cancel if an agreement on those changes cannot be reached.

Property inspection contingency

After the property inspection, both contracts restrict buyers to asking for a concession only if the issue is a major material defect. But buyers often color outside of these lines. The Multi-Board contract gives sellers the right to cancel if the buyer overreaches.

Loan approval

If a buyer’s financing falls through, the CAR gives the seller the right to save the deal by finding alternative financing for the buyer. No such right exists on the Multi-Board.

Read on or go back to the top.

What if the buyer uses a non-standard form?

Extreme caution is urged if a buyer uses a form that is not a CAR or Multi-Board form.

Some buyers target sellers who may be in financial distress or do not have their properties marketed for sale. Known in the industry as wholesalers, “rescuers,” “subject-to buyers” or “investors,” these buyers usually use their own forms. Sellers receiving offers of this sort are strongly advised to seek legal counsel before signing. Many such agreements are terribly unfair or outright dangerous for a seller.

Caution is also urged with rent-to-own and installment contracts that allow a buyer to take possession of a property, making small payments over time instead of purchasing all at once.

What is in the offer?

Whether the offer is on a standard form or from another source, it must have key information including:

Identification of both parties
The physical address of the property
Description of who pays for which closing costs
The rights and obligations of each party
Timeline of when the obligations must be met—whether at closing or before
Any contingencies (the conditions that must be met before a party must complete the transaction), such as Attorney Review, Property Inspection, and Buyer Financing

The offer should also spell out the expectations for each side, the tasks that must be done to realize those expectations, and what happens if the tasks are not completed.

The earnest money (the amount buyer pays to the seller as a sign of good faith) should be in the offer, too. Including the amount and who will be holding it (typically the buyer’s real estate broker or attorney).

Read on or go back to the top.

Step 2. After the offer

Accepting, rejecting, or changing the offer

After you receive the buyer’s offer, you have three choices:

Accept: You can accept it by signing it and adding your initials as indicated, then return it to the buyer—and it becomes the contract.
Reject: You can reject the offer by not signing it and letting the real estate broker or buyer know that you rejected it. If you are interested in moving forward with the buyer, you might provide the reason/s why. Then, it’s up to the buyer to change the offer or walk away.
Counter: You can make a counteroffer by changing the terms that are not to your liking.

Counteroffers may be communicated as cross-outs and annotations on the buyer’s initial offer and adding your initials next to each change. Changes may also be communicated by voice or email to be incorporated into the offer before you sign it.

Once you and the buyer agree to and sign off on any or all changes, you have a contract.

Should I sign the offer before my lawyer reviews it?

If the offer is provided on one of the standard forms (CAR and Multi-Board), an attorney might not be necessary. If the offer is NOT on a standard form, absolutely have your attorney look at it before you sign.

Both the CAR and Multi-Board forms have attorney review or attorney approval provisions that give lawyers the ability to act on contracts during a short window of time after the agreement is signed. Your attorney can, in effect, correct mistakes. Few non-standard contracts give sellers this safety valve.

Read on or go back to the top.

Contract contingencies

Contingencies are contractual items that must be satisfied, waived, or resolved before the seller is obligated to sell or the buyer is obligated to buy. These “safety valves” allow both parties (mostly the buyer) to get out of the deal if they are not satisfied with the findings or outcomes. They also help assure the buyer that they will get their earnest money back if the transaction is canceled.

As the seller, your interests are best served by resolving as many contingencies as you can, as quickly as possible. Used correctly, each contingency gives the buyer an opportunity to get out of the deal. That creates uncertainty for the seller, which no seller likes. Sellers want to know that the deal is going forward. If not, they want it over so that they can re-list and find a better buyer.

Contingencies are almost always measured from the date of contract acceptance. Some participants in the transaction will want to work through the contingencies sequentially, one after another. Most commonly, this is how mortgage lenders approach the loan approval process. Not you. As the seller, you want things to happen concurrently. This is where advanced planning comes into play.

Here are the most common contingencies and what you can expect:

Attorney review

A period (typically five business days) allowed for both parties’ attorneys to review the contract. The attorneys may modify, add, or reject deal terms. The intent here is to correct errors in the original offer, to complete missing terms, and to ensure the written agreement conforms with the party’s intentions.

Property inspection

Gives the buyer the right to a licensed professional’s evaluation of the home’s physical condition and usually specifies the timeline for completing that inspection.

Buyer financing

This includes the terms that the buyer will accept, and the timing to get any necessary mortgage loan.

Due diligence

This is the buyer’s right to conduct other evaluations of the property, including HOA considerations, rents, and the like.

Insurability

This is the buyer’s right to confirm that the buyer can insure the property.

Title examination

Determines the steps the seller will take to help assure the buyer that buyer will get a good and marketable title to the property at closing.

Earnest Money
The timing and amount of money your buyer will put up as a security deposit and show of good faith.

Read on or go back to the top.

Step 3. The closing

What sellers need to know about the closing

The closing is when the transaction is finalized, and when keys and money are finally exchanged. Ideally, anyway.

For closings that involve a mortgage and most cash transactions, a title insurance company acts as a third-party intermediary between the buyer, seller, and lender. Mortgage lenders demand closing in this manner. The title company acts as the lender’s representative at closing and facilitates both closing on the mortgage loan and the purchase and sale itself.

Who pays the closing fees?

When there is a mortgage involved, the buyer pays the closing/escrow fee. Occasionally, parties in a cash transaction will close through their respective attorneys without an escrow. But not often. Few lawyers want to take on the administrative and tax reporting obligations that title companies handle routinely.

For cash transactions, the closing fee is split 50/50 between the buyer and seller.

Do sellers need to go to the closing?

Generally, sellers do not need to attend the closing in person. With planning and a willing law firm, you should be able to pre-sign closing paperwork and let your attorney handle the rest. Few sellers go to closings anymore.

Unless their clients want to attend in person, seller’s attorneys are going to closings appearing in person less frequently too. We deliver all closing documents in advance and transact any additional work remotely. This system is efficient (most often) and has been accepted as the “new normal.”

Read on or go back to the top.

What happens at closing?

The buyer and buyer’s attorney review and sign their mortgage lender’s paperwork. The title company and lender review that paperwork and when all are satisfied, the loan is approved for funding.

Sellers provide conveyance documents (paperwork that transfers ownership of the property to the buyer and title clearance documents) to “prove” the seller can deliver a clear, unobstructed title to the property.

The buyer and seller review the final accounting of the transaction as expressed in three documents:

The buyer’s Closing Disclosure statement is a federally mandated template that all lenders must show borrowers before the closing so that they “know” the financial terms before they “owe.”
The seller’s Closing Disclosure statement shows all seller credits and charges and most importantly, the “bottom line” proceeds of the sale.
The combined (MASTER) ALTA closing statement, which is an aggregate of the above two documents that shows all of the numbers. You will want a copy of this for your taxes.

The title company will also review all conveyance and title clearances in order to issue title insurance in favor of the buyer and the buyer's lender.

Once the loan documents, conveyance documents, title clearance documents, and final closing figures are approved, all incoming money is received and accounted for, and the title company confirms its willingness to insure the title, the closing is completed.

Read on or go back to the top.

Seller at-closing conveyance documents

As the seller, you will need to deliver specific items to finalize the sale. These include:

Deed to transfer the land underneath the home and the home itself.
Bill of Sale to transfer everything inside or attached to the home.
Affidavit of Title, an assurance to the buyer that the seller has not caused any new liens or otherwise impaired title to the property (no new leases, no judgments or lawsuits against the seller, no unpaid contractors or construction material suppliers, no new or secret mortgages or draws on equity lines of credits).
FIRPTA (Foreign Investment in Real Property Tax Act) certification to assure the buyer that you are not subject to IRS foreign real estate investor withholding rules.

Read on or go back to the top.

Typical at-closing title clearance documents

The title clearances necessary for any given transaction depend on the condition of the property’s title.

Here is a list of potential documents required at closing. Note, this list may not apply to your specific closing; you may require fewer or more documents.

Payoff demand statements from all mortgage loans and equity lines of credit.
- Your lender/s must:
  - Certify the amount you owe to pay your home’s loans off in full
  - Provide payment instructions
  - Confirm whether that lender will file a release of lien with your county upon receipt of funds
Paid assessment letter if you are a condominium owner or the property is in a homeowner’s association (HOA). This letter from your association confirms that:
- Your accounts are paid in full
- All transaction fees have been paid in full or will be collected at closing

Waivers of Right of First Refusal if you are a condominium owner or the property is in an HOA. Some associations have the right to purchase units from sellers in place and ahead of buyers. If the association has these rights, the title company will require written confirmation that the right will not be exercised.
Transfer tax declarations—The State and County, the City of Chicago, and many other local communities charge transfer taxes to sellers (or for local taxes, sometimes the buyer) for the privilege of buying and selling property. These tax declarations are “tax returns” filed to let each government body know how much tax is due. Depending on the local rules, the tax must be paid at or before closing.
Municipalities outside of the City of Chicago may have billing or inspection requirements that you will need to complete.
Plat of Survey—Unless the property is a condominium or other arrangements have been agreed to, a measured, certified survey of the property lot line, and all improvements on the property must be delivered, reviewed, and approved. Surveys help the parties understand if there are any overlaps, encroachments, easements, or other potential property line matters of interest.
If the home is in the City of Chicago:
- Certification of Zoning Compliance is required for all homes and buildings with up to five such units. Here, the city’s building department checks its records to state how many residential dwelling units exist on the property. The idea here is to indicate whether dwellings were added or removed without city permits or inspections.
- Utility Full Payment Certification—Water, sewer, and waste bills for all Chicago properties must be paid in full at or before closing. The “water cert” shows that payment or amount due.

The closing is complete once your clearance documents have all been received and approved, the title company receives your buyer’s funds, and the title company is prepared and able to insure the title for the buyer and any mortgage lender.

When those tasks are completed, the title company will disburse all funds and, most importantly, the proceeds of the sale.

Read on or go back to the top.

In conclusion

There is no rule that requires you to use an attorney to help with a Chicago area real estate closing. But as you can see, there are many complexities to the process. The easiest, most efficient, and recommended course of action is to hire experienced, knowledgeable lawyers to guide you from contract through closing.

Thanks for reading our article. We hope it informs your real estate sale.