Janis Peterson, GRI, ABR, CSP Realtor®
It generally takes less than an hour. Following months of anticipation, the initiation rites into the fraternity of property owners commence: You assume the position, that is, get seated with pen at the ready. After successfully moving through the gauntlet of documents, a set of shiny keys land in your hand. Congratulations, homeowner, you've survived the title closing, or settlement.
What you call this final real estate transaction depends on where you live and if the parties gather for the proceedings. The term settlement applies when a meeting takes place. In colloquial terms, many people refer to this as the closing. On the other hand, closing of escrow occurs without a meeting. An escrow agent collects the paperwork and funds according to the terms agreed to by the buyer and seller. When the agent receives everything pertaining to the sale of the property, the escrow is closed.
What actually happens at a closing? The seller and buyer, flanked by lawyers and other representatives, meet with the real estate agent, mortgage lender and title company to sign the mounds of paperwork involved in transferring the property and finalizing the buyer's financing. Closing papers include the deed, mortgage, numerous tax receipts, a Certificate of Occupancy and other documents. This meeting, held at the office of the closing officer (either the lender, the title company, an attorney, or a broker), typically takes under an hour, if each person comes prepared and the paperwork is in order. The last steps include the disbursement of funds to the seller for the purchase price of the property, and the presentation of the keys to the buyer. The buyer may also receive a refund of overpayment of closing costs, which had been paid out of the deposit check.
If you are unable to attend the closing, most jurisdictions allow you to review and sign the paperwork 24 hours before closing. Signed papers, which often have to be notarized or witnessed, can be mailed to the closing officer. To review closing papers in advance, have your lawyer or agent make a written request.
From the acceptance of the offer, many progressive steps lead to the day of final settlement. First, a closing date would have been set for 60 days from the date of the sale agreement. Of course, there's some flexibility. Occasionally a closing can be delayed due to unfinished work on a new home, paperwork snags, or incomplete title work.
In the meantime, the title company conducts a title search and verifies that the seller holds the title and that no liens are held against the property. If any obstacles or other conditions materialize that could undermine the sale of the property, the title company will advise the seller in writing during escrow so the title will be clear by the closing.
After the home inspection and submission and approval of the buyer's loan application, the buyer conducts the final walk-through, typically within a day or two of the closing. This is your last opportunity to verify the condition of the property and that it meets your expectations. Review the contract and bring along a small appliance to test outlets. Check that the house has been left in broom-swept condition, that all systems work and that the sellers cleared out debris and not-so-obvious objects—greasy gadgets in the garage and shed or stuff stored in the attic. As you walk through the house, try everything—appliances, faucets, toilets, light switches. Check that the seller has left what you agreed to (e.g. washer/dryer, blinds) and that repairs have been made. If what you see falls short of the contract, don't be afraid to renegotiate the price.
What can you do to avoid dollar shock at the closing? Your lender should send you an estimate of costs early on in the process. In general, costs can range as high as 6% of the loan amount (without considering discount points or broker's commission). Closing costs vary depending on your state of residency, the closing date, financing arrangements, and the lender's requirements.
A word of caution: Prior to closing, lenders usually run another credit check. Don't do anything to jeopardize your position. From the time you enter into a sale agreement, refrain from buying big-ticket items. And don't take out a loan or charge large purchases on your credit cards.
"Real Service in Real Estate." For a personal consultation on buying or selling real estate, Janis Peterson, GRI, ABR, CSP Realtor® can be reached at (610) 642-3744, e-mail: email@example.com. Prudential Fox & Roach Realtors® is an independently owned and operated member of The Prudential Real Estate Affiliates, Inc.
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