You found a buyer and you’re ready to move on. But first, you have to make it to closing or settlement. That’s the day when the final papers are signed and you (and your mortgage holder if you have one) finally get paid. This typically takes four to six weeks after finalizing the purchase and sales agreement. During this time, any earnest money the buyer paid will be held in escrow. Escrow means it’s being held by a third party until everything is settled and the sale is ready to be completed.
You can start packing up whatever isn’t already in storage but remember, until the deal is closed and the new buyer takes possession, you’re responsible for maintaining the home. For the most part you’ll be left alone during this period. You’ll have to make the home available for inspections and appraisal, and you’ll need to complete any agreed-upon repairs to satisfy an inspection contingency.
As your closing day nears, you will schedule an appointment with the escrow or closing agent to sign the final documents. In some parts of the county you may sit down with the buyer, real estate agents and a real estate attorney at the table. In other areas, you may pass each other in the hallway or maybe sign your paperwork days earlier than the buyer. Either way, a closing or escrow officer will prepare the paperwork and record the title changes at the county. They will help walk you through the process. They are a neutral party in the transaction, representing neither you nor the buyer.
Ask the closing officer to give you a copy of the documents you’ll be signing a few days before the closing meeting so you have time to carefully review and correct them.
WHAT YOU’LL BRING TO CLOSING
• The deed, if your home is paid off
• A valid, state-issued photo ID like a driver’s license or passport
• A certified check if required in the amount requested by the escrow officer
• The keys and security codes, if possession of the house is granted at closing
WHAT YOU’LL SIGN
You may have signed closing instructions when your escrow account was opened, but if not, you’ll do it now. Make sure the credits and debits are exactly correct. The escrow company will pay off any existing liens on the property, including your mortgage balance, and any property taxes owed until the date of closing. In addition, it will distribute the real estate commissions and any other fees you owe. Once all of that has been taken out of the sales amount, you will get whatever amount is leftover, either in the form of a check or a wire transfer to your bank.
The HUD-1 settlement statement
The closing agent prepares this accounting of all the money involved in the transaction. This statement is required by federal law. There is a buyer’s column and a seller’s column on this form. (You should have received a copy for review prior to the closing meeting.) Double-check all figures and look for clerical errors before signing the HUD-1 form. Check everything from the sales price to the payoff balances on your loan and the pro-rated tax and utility bills you’re being charged. You’ll need this form for your federal income taxes.
Certificate of title
This is a statement swearing you have the right to sell the property.
The deed
The deed is the instrument for transferring title. The type of deed used varies by state — grant deed, warranty deed, etc. — but the purpose is the same. Ownership transfers to the buyer when the signed deed, which includes the legal description of the property, is recorded at the county courthouse.
Loan payoff
This document shows your loan payoff amounts to be paid at closing.
Mechanic’s liens
You may be asked to sign a document swearing there is no possibility of a lien being placed against the property by a subcontractor or other laborer for money owed.
Bill of sale
This paperwork itemizes any personal property — the backyard barbecue and coffee table — you agreed to sell your buyer and transfers ownership to them. Verify that everything you agreed to sell is listed and correctly priced.
Statement of closing costs
Your signature on this document says you were informed about the various fees and closing costs ahead of time.
Statement of information
The title company will require that you swear you are who you say you are.
Read everything, and redo all the math. Speak up before signing a document if you find an error or if you question that you really promised to give your buyer credit for something, or credit for the amount listed. Mistakes happen, even with well-qualified professionals. This is the time to point them out.