A Happy Ending - The Closing

The most important factor in making sure you have a smooth closing is to stay on top of your contract contingency dates. The easiest way to do this is to work with an experienced and trusted title and escrow company. You should also keep track of dates and follow up with the buyer's lender to make sure the loan documents arrive on time for the closing and the balance of the closing funds are delivered to the escrow holder or title company.

Escrow Period

The escrow period starts once you and the buyer have come to an agreement for the sale of your home. The contract effective date is the date in which the last party signed or initialed the final contract offer or counteroffer.  All contract contingency dates start from the effective date.

The escrow holder is the person who holds the deposit money. The escrow company or title company, depending on what particular region of the country the property is located in, act as a neutral third party who are responsible for transferring paperwork between the buyer and the seller, keeping track of contract contingency dates and making sure that all the parties have completed their contract obligations prior to closing.

During the escrow period the buyer will conduct their inspections and obtain their loan approval. During the inspection period, the buyer has the right to cancel the contract and get their deposit returned. If the buyer discovers that there is something they want to object to or they need additional information, they will make their requests in writing. The seller will also need to respond back to the buyer in writing.
It is the seller's responsibility to deliver all statutory disclosure documents to the buyer for the buyer's review and approval and make any promised repairs.  A copy of any repair bills should be delivered to the buyer.

Title Company

The title company is responsible for conducting a title search on the property to make sure that the seller owns the property and that there is clear title that can be transferred to the buyer. If there is a cloud on the title, it will need to be cured. Also all liens or encumbrances must be satisfied and paid by the seller prior to closing or the property cannot be sold.
The title company will also prepare a title report or title commitment for the buyer's review and approval. After the closing, the owner's title policy will be issued and sent to the buyer. The lender's policy will be issued and forwarded to the lender.  Most of the time is it customary for the seller to pay for the owner's title policy, and the buyer to pay for the lender's title policy.

Closing Costs

Closing costs vary so you should have your title or escrow company prepare a preliminary closing statement for you. Local customs generally dictate who pays for recording fees, transfer taxes, etc. Although everything is negotiable between the buyer and seller.

Typical seller's closing costs consist of the following:

  • Proration of taxes
  • Loan payoff
  • Broker commission if applicable
  • Title Insurance (seller generally pays for owner's policy)
  • Transfer taxes
  • Attorney's fees

Typical buyer's closing costs consist of the following:

  • Appraisal fee
  • Points
  • Origination fee
  • Credit report
  • Prepaid interest
  • Insurance
  • Title fees (buyer generally pays for the lender's title policy)
  • Escrow account funding for real estate taxes and homeowners' insurance and hazard insurance
  • Recording fees
  • Attorney's fees

Keep the communication lines open between all parties. Make sure you are available.  Follow up on contract contingencies. Check with the buyer's lender, coordinate with the title, escrow and buyer's agent, if applicable, so that there are no misunderstandings. It is essential that you take a proactive role in the closing to ensure a smooth and timely closing.