You’ve found an affordable house you like, you’ve signed the sales contract and you’ve called the movers. You think the hard part is over, right?
Not necessarily. The closing, typically held at a title and trust company, is the final hurdle to calling the house your home. You, the seller, real estate agents, the lender and any other interested parties will attend. The buyer and seller will sign more documents than most first-time buyers have seen in their lives. When all goes well, the buyer leaves with house keys and a folder full of paperwork.
To prepare for settlement day, be mindful of Murphy’s Law. Check with your loan officer at least once a week to see that you are on schedule for closing. Keep a checklist of what the lender should complete and by what date. Some tips:
- Know what’s included
Make sure you know exactly what is included with the house’s purchase price. The
buyer and lawyers should clearly spell out in the sales contract “conditions and
content” of the property. A good rule-of-thumb for a buyer is: Assume nothing.
Bookshelves, drapes, custom lighting fixtures, fireplace screens, garden ornaments,
outdoor barbecues and backyard play equipment are among the items that the seller will
likely remove unless otherwise specified. The parties should resolve these details when
they first sign the sales contract. A final walk-through can end in havoc if a buyer
wrongly assumes that the dining room chandelier comes with the house.
Other issues that should be agreed upon in advance include accurate
information on real estate taxes, survey fees, possession date and homeowner’s insurance.
- Satisfy loan
conditions before closing
Be sure to satisfy any conditions attached to a loan approval before the closing.
Banks sometimes issue a preliminary approval pending the various credit, debt and resource
checks. An unresolved late payment on a credit report could forestall the loan approval
and delay the closing. For this reason many buyers check their own credit
reports and/or get preapproved for the mortgage before
looking.
- Know your fees
Know what fees are expected at the closing, and in
what form they must be presented. Typically, title companies require certified or
cashier’s checks, rather than personal checks, for any additional costs that may be due at
the closing. An unprepared buyer might have to run to the bank to cash or certify a
personal check, midclosing. If the seller refuses to wait, both sides may sign all the
documents and then delay the closing. Then the buyer can later produce the funds and take
possession of the deed without assembling the other participants.
- Agents and
attorneys
Pick your real estate agent and attorney carefully. They are responsible for the
details of the deal, and the more meticulous they are, the smoother your closing will be.
Large real estate companies often have “transaction departments” that deal
specifically with the sales process from contract signing to closing. Some real estate
attorneys request that other parties fax them necessary documents to make sure they’ve
been executed properly prior to the closing.
