Signed, sealed and delivered: closing the deal
If you and your buyer have both efficiently taken care of your respective contractual obligations associated with finalizing the sale, the process of completing the transaction – known variously as the “closing”, “escrow” or “settlement” – will go smoothly with no surprises.
Fulfilling Contingencies And Special Conditions
A pending sales agreement nearly always includes contingencies and special conditions that have to be fulfilled by the buyer and seller by the closing date, which usually falls 30 to 60 days after both parties signed the agreement.
Typical contingencies and conditions may include:
- The buyer’s securing of financing.
- A Title Search – a historical review of all legal documents relating to ownership of the property to ensure that there are no claims against the title of the property.
- The purchasing of Title Insurance in case the records contain errors or there are mistakes in the review process.
- A professional appraisal of the home, requested by the lender to ensure that the home’s actual value justifies the loan amount.
- Any additional contractual promises you have made in connection with buyer incentives, home improvements, etc.
- An independent inspection of the home’s structural and functional condition (foundation, roof, electrical, heating, plumbing, etc.).
- An independent termite inspection.
- A final walk-through – the buyer is given the chance to look at the home to make sure that it’s in the same condition as when the sale agreement was signed.
It’s important to review the sales agreement with your REALTOR® so you understand your obligations. Any shortfalls or mistakes at this point can be very costly. Your REALTOR® can discuss and remind you of these obligations, as well as help arrange for their fulfillment and prepare you for the closing.
Completing The Transaction
While different areas handle the final settlement in slightly different ways, generally the closing agent – a third-party professional, often a lawyer, who conducts the proceedings – reviews the sales agreement and does the following:
- Determines the total amount due from the buyer and collects the check.
- Determines all the adjustments (e.g. seller prepayment of taxes, utilities, etc.) and ensures that they’re factored into transaction.
- Assures that the transaction costs (closing, legal fees, etc.) are paid.
- Determines the seller’s payments, credits and adjusted net proceeds.
- Witnesses the seller’s signing of the deed and all other documentation associated with the transaction.
- Collects the keys and any other necessary items from the seller.
- Provides the seller with the net proceeds as well as copies of the documentation pertaining to the sale.
- Ensures that the buyer’s title is properly recorded in the local records office along with any mortgage liens.
In most cases, the buyer’s Possession will happen as soon as the deed is recorded, at which point your former beloved home will have a new occupant.