The Real Estate Transaction Process
Understand the complete real estate transaction lifecycle. from listing to closing to title transfer. Learn each step, the documents required, and the typical timeline.
Phase 1: Listing, Marketing, and Showing
“A real estate broker shall be authorized to act as agent of a party in a real estate transaction to offer, advertise, solicit, list, promote, mediate, negotiate, or effect the meeting of the minds on the sale, purchase, exchange, mortgage, lease, or joint venture of real estate or on the improvement thereof.”
What This Means
The transaction starts when a seller engages a broker through an Authority to Sell (ATS). a written agreement specifying the listing price, commission rate, and exclusivity terms. The broker then markets the property: online listings, social media, signage, open houses, and networking with other brokers. When a qualified buyer shows interest, the broker arranges property viewings and provides relevant disclosures. This phase can last weeks to months depending on the property type and market conditions.
- Authority to Sell (ATS): written broker engagement. exclusive or open listing
- Exclusive listing: only one broker can sell; open: multiple brokers compete
- Marketing: online portals, social media, signs, broker networks
- Property showing: broker arranges viewings, provides disclosures
- Typical duration: 2 weeks to 6+ months depending on market/pricing
Real-World Scenario
A seller signs an Exclusive Authority to Sell with Broker A for 3 months. After 2 months with no offers, the seller secretly lists the property with Broker B on an open listing basis. Broker B finds a buyer within a week.
Who is entitled to the commission?
Phase 2: Offer, Negotiation, and Contract
“A contract of sale is perfected at the moment there is a meeting of minds upon the thing which is the object of the contract and upon the price. From that moment, the parties may reciprocally demand performance, subject to the provisions of the law governing the form of contracts.”
What This Means
When a buyer is interested, they submit a Letter of Intent (LOI) or Offer to Purchase, often accompanied by earnest money or a reservation fee. The seller can accept, reject, or counter-offer. Once both parties agree on price and terms. a "meeting of minds" occurs. the contract is perfected. The parties then sign a Contract to Sell (CTS), which typically includes: the agreed price, payment terms, conditions (e.g., loan approval), timeline, and penalties for default. The CTS is NOT a transfer of ownership. it is a promise to sell upon full payment.
- Letter of Intent/Offer: buyer's formal expression of interest with proposed terms
- Earnest money: buyer's deposit showing serious intent (applied to price if accepted)
- Meeting of minds: agreement on the THING (property) and the PRICE = perfected contract
- Contract to Sell (CTS): formal agreement with all terms. NOT yet a transfer of ownership
- CTS conditions: payment schedule, loan approval deadline, turnover date
Real-World Scenario
A buyer offers P8,000,000 for a property listed at P9,500,000 and deposits P100,000 earnest money. The seller counter-offers at P9,000,000. The buyer accepts the counter-offer verbally over the phone.
Is there a binding contract at P9,000,000?
Phase 3: Closing, Payment, and Title Transfer
“By the contract of sale one of the contracting parties obligates himself to transfer the ownership of and to deliver a determinate thing, and the other to pay therefor a price certain in money or its equivalent. A contract of sale may be absolute or conditional.”
What This Means
Closing is when the actual sale happens. Steps: (1) Buyer completes full payment (or loan proceeds are released by the bank), (2) Seller executes the Deed of Absolute Sale (DOAS), (3) Both parties sign before a notary public, (4) Taxes are paid (CGT, DST, transfer tax), (5) BIR issues the CAR, (6) Title is transferred at the Registry of Deeds, (7) Tax declaration is updated at the Assessor's Office, (8) New title (TCT/CCT) is released to the buyer. Total timeline from DOAS signing to new title release: typically 2-4 months.
- Full payment (or bank loan release) triggers the Deed of Absolute Sale
- DOAS must be notarized. both parties present with valid IDs
- Pay taxes: CGT + DST (BIR) → Transfer tax (LGU) → Registration (RD)
- BIR issues CAR after taxes are paid (5-15 working days)
- Registry of Deeds issues new TCT/CCT in buyer's name (1-4 weeks)
Real-World Scenario
A buyer with bank financing has the following timeline: Loan approval on March 1, loan release on March 15, DOAS notarized on March 20, CGT and DST paid on April 5, CAR released on April 25, documents submitted to Registry of Deeds on May 1.
When can the buyer expect to receive the new title in their name?
Frequently Asked Questions
What is the difference between a Contract to Sell and a Deed of Absolute Sale?
A Contract to Sell (CTS) is a promise to sell in the future upon full payment. ownership stays with the seller until all conditions are met. A Deed of Absolute Sale (DOAS) is the actual transfer document. once signed and notarized, ownership transfers to the buyer. Typically, parties sign a CTS first (with payment schedule), then the DOAS when full payment is completed. For cash transactions, they may go directly to a DOAS.
What is earnest money and is it refundable?
Earnest money is a deposit by the buyer to show serious intent. Under Article 1482 of the Civil Code, "whenever earnest money is given in a contract of sale, it shall be considered as part of the price and as proof of the perfection of the contract." This means earnest money is generally NOT refundable if the buyer backs out (since it proves a contract exists). However, if the deal falls through due to the SELLER's fault or a failed condition (e.g., loan denial), the earnest money should be returned.
How long does the entire buying process take from offer to title transfer?
Typical timelines: Cash sale (no loan): 1-3 months total. Bank-financed: 3-6 months (loan processing adds 1-2 months). Developer pre-selling: title transfer happens only after full payment of the contract price (could be years for installment plans). The longest steps are usually: loan approval (2-4 weeks), CAR processing at BIR (2-3 weeks), and Registry of Deeds processing (2-4 weeks). Having complete documents ready speeds up every step.