What to Expect at the Closing Table

I HAVE A CONTRACT, WHAT DO I EXPECT?

ATTORNEY REVIEW PERIOD

Usually upon receiving the fully executed contract the Sellers Attorney will have ordered a preliminary title report, including the payoff balances from Seller’s lender (if applicable), and pull property tax information from the public records.

Behind the scenes, the attorneys and the agents will be working to resolve all aspects of the property sale including clearing any encumbrances on title that impact the conveyance, ironing out financing, removing inspection contingencies, and verifying repairs have been completed, once both parties agree to settle.

Pro Tip: Be Patient. Both parties want to close the deal, so the best tip is to let the professionals handle this and try and keep emotion out of it if possible. The Attorneys are negotiating to protect their clients best interests and control their clients costs and expenses as much as possible.

Once the terms of the sale have been fully negotiated, (attorney review process fine tuning some key terms in the contract (tax prorations, credits, etc), if the Buyer is getting a loan, the parties will wait for the Buyers lender to issue an unconditional loan approval or a “Clear to Close”. Which means the Buyer’s lender is ready to send the money. To get this clear to close requires appraisals, inspections and Buyer’s cooperation to with their Lender to provide a lots of documents for proof of income, verification of income, letters of explanation, proof of funds in Buyers accounts etc. Seller has no access to this process, nor is involved in any way, other than waiting for the Lender’s final approval.

WHAT TO EXPECT FROM YOUR INSPECTION

Unless the sale of the property is “As Is”, for example a short sale, Seller’s should prepare the property for an inspection. Check outlets, light switches, and light bulbs are working. Get the all your mechanicals checked and cleaned. Appearances matter.

Home inspectors may be less critical if the property is spotless and in good working order.

A Buyer may ask for repairs based on the results of the inspection report. As soon as you get the report immediately send it to your Attorney and your Realtist. Go over the inspection report in detail as soon as you get it and discuss with your Realtist. A Buyer should be looking for the items the inspector flagged that need to be repaired.

Seller will receive Buyers requests and can then determine either to offer a monetary credit or make the repairs. A Buyer may consider accepting a credit instead of requiring repairs, if the lender approves credits in lieu of repairs. CAUTION: Certain lenders and loan types will not allow repair or construction credits and require the Seller to make the repairs prior to closing. Your Realtist can help determine what’s fair – and best – for your situation.

TYPICAL BUYER’s Checklist

• Roof and attic space
  1. Looks for signs of missing or damaged shingles or areas of excess wear.
  2. Decides how many layers of roofing exist on the structure.
  3. Makes sure gutter joints are sealed and draining properly.
  4. Checks the attic for signs of leaking, poor ventilation and rotted wood
• Exterior
  1. Sees what type of siding is on the structure, what’s underneath it and what shape is it in.
  2. Checks if there are any broken windows, rotting frames or sections that aren’t sealed.
  3. Makes sure the house appears to be straight with a solid foundation.
• Plumbing system
  1. Makes sure there is adequate pressure from all fixtures.
  2. Runs the water and inspects pipes and flooring for signs of leaks or water damage.
  3. Estimates age and material of all piping in the home.
  4. If the home is on a well system, a well water test should be included.
• HVAC
  1. Inspects airflow throughout the house and makes sure all equipment is functioning properly.
  2. Checks for signs of asbestos which is then usually tested by a different service.
  3. Records the age of the equipment and its cleaning history.
• Electrical
  1. Checks for signs of old knob-and-old tube wiring.
  2. Examines the electrical service and determines if there is adequate capacity.
  3. Sees if all electrical components are up to code and will recommend any updates as needed.
  4. Loose wires or wiring in the outlets, loose wires in the electrical box.

IT’S CLOSING DAY! BUYERS AND SELLERS

FINAL INSPECTION & WALK THROUGH:

Once we have the Buyer’s lender’s Unconditional Approval, it is HIGHLY encouraged that the Buyer perform a final walk through of the property and if possible bring the inspector back to check that Seller completed all repairs to Buyer’s and Inspector’s satisfaction. If this inspection fails, the Buyer should not close until this gets resolved either with a lender approved credit or actual repairs.

Once the Buyers Final Inspection is passed and completed, then all Buyer’s contingencies are now fully waived, and Buyer must close or lose their earnest money. Seller and Buyer Attorneys, with all parties input and consent, agree on a closing date and location.

At least 2 days before closing, you should receive a Settlement Statement that outlines the intricate financial details of the property sale (all costs, payoffs, credits, prorations, fees, proceeds sale price, earnest money escrow, etc). Make sure to read through each line item of the statement on your side, taking special care to check for accuracy and that all monies are accounted for, and what expenses you are paying for. Be aware if you find mistakes or need clarity, contact your Attorney and Realtist right away. Most of these are resolved ahead of time or if necessary at closing.

SELLER’S CHECKLIST TO PREP FOR BUYER’S HOME INSPECTION

To stay on top of things, here is a checklist of stuff Seller can do before the home inspection to make sure all goes smoothly.

One Month (Or More) Before Inspection

• Gather necessary paperwork: Look through your files and collect anything involving general maintenance and repairs. Include documents showing HVAC inspections, roof repairs and other house-related fixes. If a problem comes up in the home inspection that you’ve already addressed, you’ll want proof.
• Draw a map of the property or locate your survey: If you have a septic system or a well buried in your backyard, sketch where it’s located so the home inspector (and the future homeowners) can find it. If you’re not sure where it’s located, this gives you some time to find out before the inspector arrives.
• Fix what needs fixing or be prepared to negotiate: Even if you decided to mask certain issues while showing your home, the inspection would most likely uncover them. Don’t wait until the last minute to address these areas of your home. All problems you expect to show up on the inspection should be dealt with at this time. If you choose not to make the repairs, be prepared to adjust your asking price.

One Week Before Inspection

• Make sure the inspector has access to all areas of your home: In most scenarios, you’re likely packing up your belongings while you prepare for your home to be inspected. Make sure, however, that you pack strategically. The home inspector will need to inspect every closet, electrical panel, furnace, water heater, attic access and crawl space opening. Don’t stack boxes in a way that it would block access to these locations.
• Remove clutter and debris outside: If you have clutter anywhere on your property, now is the time to take care of it. This includes cutting back any branches or weeds that cover the roof, siding or other areas of interest. Make sure the home inspector can get to exterior faucets and electrical outlets, and that they’re not blocked.
• Turn on all utilities: If the property is vacant, make sure all of the utilities are turned on.

The Day Before Inspection

• Clean the house: It might seem counterintuitive since there are moving boxes everywhere, but you should clean your house thoroughly before a home inspection. Keeping a clean house won’t make much of a difference if you have an issue with a leak or a faulty electrical panel. However, a clean home gives the home inspector the immediate sense that this property is well cared for and well maintained. They’ll be less likely to dig deeper into minor issues if they have the feeling that the house has been kept in good shape.
• Inspect lights and appliances before the inspector does: Check for blown out light bulbs and replace them as needed. This is also a good time to make sure pilot lights are lit on your stove, water heater and furnace. Light fixtures and appliances that don’t work can cause the inspection to be incomplete and delay the entire process.
• Double check that all areas are accessible: Retake a tour of your property today with the idea of making accessibility a priority. Make sure the inspector has access to locked gates, sheds or anything else that’s not in the realtor’s lock box. You can remove the locks or provide keys to your real estate agent.

On Inspection Day

• Tidy up: Pick up your bedroom and living areas, wash dishes in the sink and leave the house in excellent condition.
• Make sure animals aren’t an issue: Before you leave the property, make sure all of your animals are secure. Most home inspectors prefer that animals are taken off the premises, but you can secure them in a crate on the property if necessary.
• Leave the house: If the buyer is paying for the inspection, make sure you’re out of the house at least an hour before the inspection. Expect to be gone at least three hours so the inspector can do a thorough job.

AT THE CLOSING TABLE

What You Need to Bring to Closing:

• Photo identification
• Your questions about the closing statement (Does everything make sense?)
• Seller brings the main keys and security codes for the home
• Seller brings any documentation showing proof of repairs Seller made per the home inspection (invoices, paid receipts, etc).
• Buyer brings Cashiers Check or Wire transfer of Down payment Funds needed to close (check with your attorney and the Title company for amounts)
  PRO TIP: send a little extra, the title company will refund you any overage.
  CALL AND CONFIRM WIRE INFORMATION BEFORE SENDING

What Your Real Estate Sales Professional, Escrow, and Closing Agent Bring to Closing:

• Your mortgage and loan payoff information
• Escrow account information
• HUD 1 Settlement Agreement
• Inspection Agreements
• Termite inspections and property tax information
• Seller’s attorney brings seller documents (deed, aff of title, bill of sale, etc)

OPTIONAL REMOTE CLOSING: Sellers you don’t have to go to the closing!! Sellers you have an option to pre-sign a full set of seller documents in advance and deliver them to your attorney or the titles company. Usually this will also include a power of attorney authorizing your attorney to sign docs if any changes come up.

CLOSING DAY EXPECTATIONS

SELLERS PREPARING TO MOVE OUT BEFORE CLOSING

• Seller should Clean the home one final time, taking special care to check drawers and closets for items left behind.
• Turn off shut-off valves that could flood and damage your home.
• Leave all “extra” keys and garage door openers on your kitchen counter or out in the open where your new buyers can find them.
• Seller should Forward mail, and formally change Sellers address with the post office to Sellers new Address.
• Begin notifying creditors, subscription services, family, and friends of your change of address.
• Gather appliance manuals, receipts, and warranty information for your new buyers.

AT CLOSING TABLE

Typical Seller Expenses Paid at Closing (line items on Settlement Statement):

• Seller’s remaining mortgage balances (if applicable)
• Agent commissions (typically around 3-6%)
• Property taxes, utility bills, HOA dues, homeowner’s insurance, and other bills related to your home
• Escrow/Attorney Fees
• Title Fees
  1. Owners Policy
  2. Title Update Fees
  3. CPL - Closing Protection Letters Fees (for you and your lender)
  4. Wire transfer Fees / Overnight fees (usually per wire)
• Survey Fee $650 (no survey for a condo, max. 6 months)
• Transfer Taxes (county, state, and municipal varies based on property location)

Typical Buyer’s Expenses Paid at Closing:

• Title Fees
  1. Loan Policy
  2. Lender Endorsements
  3. Update Title Fees
  4. CPL - Closing Protection Letters Fees (for you and your lender)
  5. Wire Fees
• Escrow Fees (if you are purchasing with a mortgage you pay 100%, if cash deal 50% split with Seller
• Attorney Fees Your attorneys fees
• Transfer Taxes (county, state, and municipal varies based on property location)
• Loan Fees (see your lender about this)
  1. Loan origination fees
  2. Loan points
  3. Appraisal fees

Remember, the expenses listed above are typical but may not be all-inclusive. Depending on the details of the sale, you may have additional paperwork to sign or fees to pay. Fortunately, this is one area where your Attorney and Real Estate Sales Professional will take the reins and let you know what’s required.

Pro Tip: Sellers, DONT cancel homeowner’s insurance or utilities until after the closing is completely finished. Leaving the home without heat, air conditioning, or proper insurance is disastrous and a very bad idea; in many cases, it can be a deal-breaker.

What to expect at the Closing Table.

Seller, Buyer, their Attorneys and their Realtist Brokers will sign all paperwork required for the closing sale of the property. At closing the Escrowee Title Company collects all documents, will send out wire transfers or checks to pay everyone at closing including all outstanding balances regarding the Seller’s loans, Sellers expenses, Broker commissions, prorated property tax credits from Seller to Buyer, real estate transfer taxes, condo fees (if applicable), rent proration credits Seller to Buyer (if applicable), unpaid real estate taxes, current open tax bills released but not yet due and any escrow hold backs or funds will be held as agreed by the parties. The title company will refund any Buyer overpayments to Buyer with a check depending on the amount, and deliver Seller’s proceeds in excess of all costs to Seller in a check or a wire depending on amount and Sellers preference.

SELLER may need to bring money to closing (This should NOT apply to short sales). Sometimes if the Seller doesn’t have enough funds from the sale, than Seller may need to bring a check to closing. If that’s the case, make sure to check with your Real Estate Sales Professional for an exact total so you can bring a cashier’s check in that amount to closing.

What to Do After Closing

Once Sellers home’s closing is complete, it’s time to wrap things up. Seller will have received a package of all closingrelated paperwork to pack away, along with a check for the proceeds of the sale (if applicable) deposit immediately. What’s next? Check out this short list of after-closing responsibilities and to do’s.

After-Closing Checklist:

• Make sure all utilities are transferred out of your name and to the new owner.
• Cancel your homeowner’s insurance policy once the title of your home has been formally transferred. You may receive a refund for part of your prepaid homeowner’s insurance policy.
• File your closing paperwork in a safe place so you can access it if needed.