Closing With The Buyer
Preparing to Close
There's a lot to do in the weeks leading up to the closing, so good organization is a must. Proper scheduling can reduce your stress and prevent any mistakes or delays.
Create a schedule of the items you need to complete before closing. Set up a file with all of your purchase and closing related documentation so you have it readily available.
Confirm Payment of Deposit Funds
The contract probably calls for the balance of the deposit to be paid to the escrow agent within a certain period of time. Confirm that this has been done as required. The deposit is your major security until the closing - make sure it is posted as required. If the buyer seems unable to produce the required funds it could be a sign of trouble - so find out what is going on.
Monitor Inspections and Contingencies
The contract is probably subject to a number of inspections and contingencies. These conditions are intended to allow the buyer to check things out and make sure there are no problems - not as an open ended delaying tactic. Confirm that the buyer schedules the inspections in a timely manner, and make sure access to the property is available.
Deal with the Inspection Reports
The buyer's inspection reports will usually list a number of sub-standard items - few homes are without defects. The buyer my provide you with a list of things to be corrected before the closing. You may or may not agree that you are responsible for items on the list. At this point another negotiation may result. Although each deal is different, typically the seller will repair (or provide a credit to cover the cost) any major or structural problems. The seller is usually responsible for the cost of radon remediation, if required. Normal wear and tear items, on the other hand, are not usually corrected by the seller.
Address Your Contingencies
The contract may include contingencies or conditions requiring the seller to take certain actions - removing debris or an old shed, for example. Make sure to attend to these matters early so they do not become a problem at closing time.
Get a Payoff Letter
If you have a mortgage on your home you will be paying it off at the closing so you can transfer clean title to the buyer. Your lender should provide you with a payoff letter specifying the exact amount required to completely retire the loan. The payoff letter should also specify a per diem, an additional amount required for each day after the payoff letter is dated. For example, if your payoff letter states a figure of $95,000 with a per diem of $20 you would owe $95,200 if the closing occurred 10 days after the date of the letter. Your attorney or escrow agent may request the payoff letter from the lender - but it's still a good idea for you to make sure it gets done.
Review the Closing Costs
Consider your closing costs so you have a good idea of what proceeds you will net from the sale. Our guide to closing costs can give you some idea of what to expect.
Provide Information to the Buyer
Provide the buyer with copies of any relevant documents you have - surveys, septic designs, service records, building permits (from past projects), etc. The contract may specify that you are to provide these items, but even if it doesn't, it may help the buyer conclude the inspection phase - and it is a basic courtesy.
Get Ready for Moving Day
You'll probably be moving out right before the closing (or just after if you've arranged this with the buyer), so now is the time to start preparing. You need to hire a mover (unless you plan to handle the move yourself) and start packing your possessions. It's also time to make arrangements for utility shutoffs and installations at your new address - our utility checklist can help you organize these tasks.
Do the Walkthrough
The final walkthrough should be conducted the day of or before the closing. The walkthrough allows the buyer to confirm that the house is ready and that any required repairs have been completed. Conducting a walkthrough reduces the chance of confusion or problems at the closing.
Check with your attorney or escrow agent a day or two before the closing date to confirm that everything is on schedule. Remind the attorney or agent to complete the closing statements and other documentation in advance - this may seem obvious, but closings often become protracted affairs because the professionals are unprepared.
Have Your Paperwork Available
Bring all of your documentation to the closing in case you need something at the last minute. Your closing file should include the contract, receipts for any repairs made, and copies of all correspondence relating to the purchase.
Understand the Closing Documents
Review the closing statement (HUD-1) and other documents beforehand so you understand the purpose of each. Your primary documents are the closing statement, the deed, and the mortgage cancellation paperwork.
Deal With Any Problems
Closings frequently proceed without a hitch, but problems are not uncommon. Don't panic if the closing hits a snag - most issues can be resolved by simple means, such as escrowing funds to cover a contingency or unfinished repair. Even if the closing has to be postponed, don't overreact - chances are the matter can be resolved in a few days.
Execute the Documents
At this point the parties should execute the closing statements and other documents - and you will then sign over the deed. Congratulations, you've just sold your house!
Give Keys and Documents to the Buyer
You should have the keys available to give to the buyer at the closing. Additionally, you should provide all warranties, repair records, etc. pertaining to the house - either bring these to the closing or leave them in an accessible location in the house.
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