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Closing and Settlement

closing on a houseAfter the searching for a buyer has been done, the negotiations have been completed, the house has been inspected, and the mortgage has been applied for and committed to, the focus suddenly turns to the Closing, Settlement, or Escrow as it is known in some localities. For simplicity, in our discussions here we will refer to the process when it all comes together and you finally sell your house as Closing. An understanding of the elements of and players in the closing, as well as a concise preparation for it, will eliminate many nervous hours as the day approaches.

What is involved?

It is the proverbial "signing on the dotted line:" the process of which will take the title to the house out of your name and put it into someone else's--your buyers. The keys to the house leave your hands for the last time and are delivered to the buyers. The weeks and months of anticipation are all settled in a very short amount of time at the closing.

Closing procedures will vary from locality to locality. In some areas, the buyers and sellers (as well as their Real Estate Agents) will all attend the closing. In other areas, only the buyers will be present. The closing will take place at the office of an Attorney, a Title Company, or an Escrow Company (again, there is some variance here based on your local laws and tradition). In general, though, the closing will be attended by all of the buyers involved and their Real Estate Agent, as well as the Closing Agent.

As a seller, you will in all probability have an attorney who will represent you, either physically at the closing or through a review of all the documents relating to the sale. At the very least, your attorney will prepare the deed and coordinate all paperwork with the buyer's attorney or closing agent.

What forms are involved?

Although there may be additional documents involved, the primary items which are dealt with at the Closing are:

The Settlement Statement--Page 1 and Page 2
The Contract (to purchase a sample contract agreement for your state, visit FindLegalForms.com)
The Loan Papers (for the buyers)
Title Insurance (for the buyers)
Homeowners Insurance (for the buyers)
The Title or Deed
The Down Payment and Closing Costs (of the buyers)
Payoffs of any existing mortgages
Funds available to the sellers upon recording of new deed

How to minimize closing problems

From the time that the contract is ratified by all parties and you have secured an attorney, it is a good idea to keep in regular contact with your attorney--right up to the day of closing. Make it a point to contact the attorney's office on a regular basis to monitor progress toward closing. In this way, you can often avoid problems that seem to often arise on closing day or shortly before.

Find sample Real Estate Contract forms for all U.S. states here.

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RECOMMENDED READING

 

The Complete Guide to Your Real Estate Closing
by Sandy Gadow
Advice from a veteran of thousands of closings

   
 

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