Real Estate Closing Day
The home buying process thus far has been a series of dances to get you closer to the real estate closing. Buyer and Lender. Buyers Agent and Sellers Agent. Title Company and both Agents. Insurance Broker and Lender. And of course Agent and Buyer/Seller. At the end of each song, we are one step closer to a successful closing and in all likelihood, it’s time to ask another person in team, to dance.
The first part of the process is labor intensive for agents, seller, buyer and inspector. The last part of the process is more labor intensive for the lender, buyer and appraiser (although if you have read my last post, the appraiser part sometimes seems less labor intensive than we are given to believe).
At about a week before closing, when loan commitment has been obtained, it’s time to schedule the closing.
The title company is normally the place where closing takes place. Our lovely escrow officer will draw up the closing documents using the contract to buy (and all its amendments) and the figures/documents from the lender. They will send the closing documents back to the lender for final approval before emailing the Buyers Agent and Sellers Agent a copy of the settlement statement.
Upon receipt of the settlement statement I do a couple of things – whether Im the buyer or my clients agent. I check the address and names on the document are spelled correctly. Then I run down the list of figures, line by line, to ensure the taxes, HOA figures, seller credits, earnest money and purchase price are all accurate. About 1/5 have some little error that requires an amendment and reissue but it’s rare that my client ever knows about it.
Then it’s time to email it to the client and go over any questions that have. In my experience, most buyers/sellers have the same questions:
- Can you explain the credit I’m (buyer) receiving for the property taxes? Of course! Property taxes are paid in arrears. Therefore 2016 property taxes are due in 2017. Since you didn’t own the house the entire 12 months of 2016, the seller has to give you a credit for the portion of the time that they owned the property. You then will pay the entire amount due in 2017. This is a final settlement so if taxes go up, you pay the difference and if they go down, the seller cannot ask for a refund.
- Why are they collecting $350 from me (seller) for the final water bill when I have never had a bill over $120 before? The title company will order the water meter to be read the day of closing, they will receive the bill and pay it out of the $350 they have collected from you. They will refund you the difference. I know its a lot of money, but if there was an incident and the toilet ran for a few days after you moved out but before closing, your water bill could be unusually high and this should cover it. If the water bill is not paid, it can become a lien against the property (rather than the seller) so the title company takes care of this in order to protect the buyer.
- What does POC mean when written after the appraisal cost? It means paid outside of closing. Would I be correct in assuming the lender collected a credit card number from you to pay for the appraisal at some point during the loan process?
- Why is the payoff amount of my loan (seller) different from what I saw online in my account yesterday? The payoff amount is what is owed on the mortgage and prorated by the day of the month, minus any payment that has been made in the last little while. It’s confusing I know! But the title company contacts the mortgage servicer to get this figure to the cent, based on the date of closing.
- I see the “cash at closing” amount on the bottom of the settlement statement. What is an acceptable way to bring this to closing? Good question! No, you cannot ever bring a suitcase of money to closing. Personal checks are not acceptable either since they will not clear in time to give the money to the seller. The buyers agent will double check with the title company about their policy of cash, but in general if the amount is large (over $100,000) you should wire the funds to the title company a day or two before closing. For smaller amounts, a cashiers check made out to the title company is just fine. Make sure the bank has signed the check! (It happened to me and I’m not the first or the last… They forgot to sign it and I forgot to check it!) Your lender will remind you that the money must come from the account you previously verified as having the funds in. The loan will not fund at closing if you verified a bank account at Elevations Credit Union with $70,000 in it, but then drew a cashiers check from you First Bank account and took it to closing. Why? We are not here to facilitate your money laundering, that’s why! 🙂
And then, quite suddenly, you find yourself at the closing table. The closer takes the head of the table and buyer and seller flank her, making it easy for her to hand documents to her left and right, to keep an eye on the signatures and pointing stuff out as necessary. The lender and other attendees sit where comfortable. It is, in many ways, anticlimactic. The hard work to get there has been done and if all is going to plan, the only thing left is signing and money. So with that in mind, I hand over my impressive cashiers check and my drivers license. Both are whisked away for copying. The paperwork begins. It’s a pile about an inch high and normally takes about an hour. Given that I was familiar with the documents, we skipped the part where the closer gives her abridged explanation of each one and I just signed… and signed… and signed!
Closing is normally a friendly affair. In my opinion the good ones are where the Buyer, Seller, both Agents, Lender and Closer are all sitting around the table. There are cookies or other treats and everyone is sipping on a hot coffee, soda or water. Chit chat ensues and the buyer, who may not have met the seller up to this point, gets some great pointers about their new house and the seller hands over the email/phone/new address in case the buyer receives any of their mail or has more questions. Yeah no, this is not the quickest or quietest closing!
Other times, the seller may have already moved and signed out of state, or the buyer and seller cannot make it to closing at the same time and just one side of the transaction is there. It’s quick, quiet and efficient… But less fun.
My closing was the friendly kind. It was the first time I had met the seller, Jill and her husband. Also the first in-person meeting between me and the listing agent, Krista. My boyfriend and my lender were both present. (Call me for a lender referral because my guy is the BEST.) Mandy was our closer and she and I had met on many occasions before, so I knew we were in good hands. There were muffins and cake, smiles and interesting conversation. I had my morning coffee in hand and was thoroughly enjoying myself. The seller suggested we meet back at the new house after closing for a little orientation of the hot tub, introduction to the neighbors and rundown of the gardens. Life was good.
Like many of my clients, the buying and selling of real estate signifies a change in life… A new chapter beginning. It’s somewhat emotional, a little daunting and very exciting. I was definitely looking forward to a new phase in my relationship, beginning with “camping” in the vacant house that very night. We had our swim suits on standby for the hot tub already!
The real work (moving) was yet to come…