Making sure that everything is signed, sealed and delivered by closing day
If the seller and buyer have both taken care of their contractual obligations, the process of completing the transaction – known as the “closing” – will go smoothly with no surprises.
Fulfilling Contingencies and Special Conditions
As noted in Successfully Negotiating The Deal, a pending sales agreement nearly always includes contingencies and special conditions that must be fulfilled by the buyer and seller by the closing date. Typical contingencies and special conditions include:
- Buyer’s securing of financing.
- A Title Search – an historical review of all legal documents which relate to ownership of the property in order 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 in order to ensure that the home’s actual value justifies the loan amount.
- An independent inspection of the home’s structural and functional condition (foundation, roof, electrical, heating, plumbing, appliances).
- 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.
- Any additional contractual promises you have made in connection with buyer incentives, home improvements, etc
It’s important to review the sales agreement with your REALTOR® so you understand your obligations. Any mistakes or shortfalls can be very costly. Your real estate agent will remind you of these obligations, as well as help arrange for their fulfillment and prepare you for the closing.
Closing the Deal
Generally, a third-party professional – usually a lawyer – 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 costs, legal fees, title search, transfer taxes, etc.) are paid.
- Determines the seller’s payments, credits and adjusted net proceeds.
- Witnesses the seller’s signing away of the property title 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.
And that’s it! In most cases, the buyer’s Possession Date will fall within a couple days of the Closing Date, at which point your former beloved home will have a new owner.