Apr 15, 2016
Real Estate Closing: What Do I Need To Know?
The real estate closing, which in different parts of the country is also known as “settlement” or “escrow,” is the final step to completing the transaction. The process is becoming increasingly computerized and automated. Most of the documents preparatory for closing can be faxed, emailed and nowadays even signed via e-signatures online.
In practice, closings bring together the parties who are part of the transaction. The basis of the transaction between buyers and sellers is the real estate purchase contract-or the written agreement between parties. A closing agent or an attorney will generally help facilitate this process. All necessary claims (fees, property taxes, closing costs, liens etc.) pertaining to the transaction must be settled on both the buyer and the seller's sides. While the history of property ownership has been checked by this point, it’s still possible that the records contain errors, unrecorded claims, or flaws in the review itself, thus title insurance is necessary. Also, at closing, transfer taxes must be paid (if applicable in your State-see here for a list). In most transactions, the closing agent also completes the paperwork needed to record the loan.
What should I expect?
Settlement is a brief process in which all of the necessary paperwork needed to complete the transaction is signed. Closing is typically held in an office setting, sometimes with both buyer and seller at the same table, sometimes with each party completing their papers separately. In some states, such as Utah, it is common practice that buyers and sellers each use their own title company. Also, it is possible in some cases, (usually for out of town) parties don’t need to attend a specific event; signed paperwork can be sent to the closing agent, or party (documents usually require notarization) by overnight delivery.
Whatever the case, the result is that title to the property is transferred from seller to buyer. The buyer receives the keys upon funding and recording, and the seller receives payment for the home. From the amount credited to the seller, the closing agent subtracts money to pay off the existing mortgage and other transaction costs. Deeds, loan papers, and other documents are prepared, signed, and filed with local property record offices.
What do I need to do?
One of the best parts of settlement, if the transaction has been handled properly, is that buyers and sellers need to do very little. Credit here usually goes to the real estate agents, lenders and closing agent's involved to ensure that all the t's are crossed and i's dotted.
Before closing, buyers typically have a final opportunity to walk through the property to assure that its condition has not changed materially since the sale agreement was signed.
At the closing itself, all papers have been prepared by closing agents, title companies, lenders, and lawyers. This paperwork reflects the sale agreement and allows all parties to the transaction to verify their interests. For instance, buyers get the title to the property, sellers receive money and/or are relieved of their mortgage debt, lenders have their loans recorded in the public records, and state governments collect their transfer taxes-if applicable.
Closing is the culmination of the entire real estate transaction process. There are a lot of moving parts that need to occur to ensure a successful closing. It is important to make sure you have the right people, who specialize in this process, on your side. For more questions about this or if you have any specific Highland Utah Real Estate questions please contact me-I'm happy to help!