How to Close On Your Home Sale
What to Expect in the Closing of Your Home Sale
As part of the purchase agreement, you and the buyer chose a closing date by which all negotiations, repairs, and inspections must be completed. As the closing date approaches, what are the preparations that you as the seller should make? And what are common hiccups that occur in this closing process? Here, we cover a few of the most common issues pertaining to closing.
What is Open Escrow?
From the time that the buyer puts their good faith deposit into escrow until the sale is clear to close, the sale of your home is in a period called “open escrow.” During open escrow, many things can happen. During this time, the buyer is working out their final loan paperwork and forwarding it to the escrow company until the sale is completed. As the seller, it is your responsibility during open escrow to complete any repairs or any other changes to the property negotiated upon during the working out of the sale contract. During this time, you will also work out the transfer of utilities and make other preparations to move. A mistake many first-time home sellers make is to cancel their home insurance too soon. It’s important to remember to not cancel your home insurance until after the sale is completed.
When you are getting ready to close the sale of your home, it’s important to ensure that all the closing documents prepared by the closing attorney, or escrow officer, are signed and notarized. While each transaction is different, and local laws vary, here are some of the documents you are likely to see at the time of close.
- Certificate of Title
A legal statement that you have the right to sell the property.
The transfer of the title. This document has several names depending on region; warranty deed or grant deed, for example, but they each serve the same function. At the moment when the deed is signed, ownership is transferred.
- The HUD-1 Settlement Statement
An accounting of all the monetary transactions involved in the sale of the home. This form will be filled out by both the seller and the buyer, with columns for each. Go over this document closely.
- Bill of Sale
An itemized list of everything that is transferred in ownership, which can include things like furniture. Double check the list to make sure everything is there and listed at the correct price.
- Statement of Closing Costs
A description of the closing costs and a statement that you are aware and agree to them.
- Statement of Identity/Information
This document is called Statement of Identity or Statement of Information. This is a statement that declares that you are who you say you are. Valid photo ID will be required.
- Loan Payoff
If there’s any money still left to be paid off on your loan, this statement says that it will be paid off at time of closing.
- Mechanic’s Lien
This document isn’t always included, but it is a statement that declares there is no possibility that a sub-contractor could have a lien on the house due to lack of payment. The document states that anyone who was involved with prior repairs or renovations on the home have been paid in full.
- Final Closing Instructions
Sometimes this document is signed at the opening of the contract, other times, it is signed at the end.
Other Considerations On Closing Day
Both the buyer and the seller will sign a stack of paperwork to complete the sale. While buyers have much more to sign, sellers still have a few important documents to prepare. Ensure all closing documents prepared by the closing attorney (or escrow officer) are signed and initialed and notarized.
The closing attorney will bring most of this paperwork with them, but the seller needs to remember:
- The deed to the home (if the home has been paid off and there are no liens)
- Government-issued photo ID such as driver’s license or passport
- A certified check for the escrow company
- The keys to the home
Make sure you’re aware of the following:
- The date you plan to close
- The date when the buyer’s loan will be funded
Make Sure it All Adds Up
The seller does not have nearly as much paperwork as the buyer in order to close the sale, but each document in the seller’s pile is vital. Make sure all monetary accounting of the transaction adds up. Also, as you prepare to close, make sure the closing date is clear and works for both parties, and double check to make sure the buyer’s loan is funded.
If not, you could be in for some serious complications. After all the work you put into selling your home, make sure you keep up the same dedication right up to the close as you did during the rest of the process.
The Final Walkthrough
The final walkthrough is the buyer’s last chance to have a look at your home before the sale closes. Not quite an official inspection, the walkthrough is a spot check that you’ve done the work agreed upon in the purchase contract. To prepare for the final walkthrough, your home will require one more clean and polish. Making sure all storage spaces, closets, and bedrooms are vacated. In the event that you have worked out with the buyer a move-out date after the transfer of the deed, simply make sure the buyer is able to give the home one more full inspection.
Unless you have worked out a delayed possession of your home with the buyer for after the close of the sale, the final walkthrough will be one of the last times you will be inside of your home. For those planning to promptly vacate the property, here are some good things to keep in mind as you prepare for that final walkthrough.
It’s important to schedule some buffer time between the date of your move out and the final walkthrough. You should aim to vacate the property two or three days before the buyer comes to inspect it. This will give plenty of time to make sure absolutely everything is vacated and to deal with any hiccups that come along the way.
Clean, Clean, Clean
If you can afford to have your home professionally cleaned, do it. If you are doing it yourself, make sure you take the cleaning job to the next level. This means vacuuming air vents, scrubbing the inside of the oven, and shampooing the carpets, among other things.
The new buyers will expect a vacant home, which is different than when you showed it. Unless the new buyers purchased the show furniture, you will need to make arrangements to sell or otherwise remove it. This is one of the many tasks made easier by the buffer window.
In the course of moving furniture, home surfaces can get damaged. Inspect floors, door frames, and walls and touch up any scuffs or dents after you complete the move. If there is no time to address issues before the walkthrough (again, this is the reason for the buffer), notify your agent so the damage doesn’t come as a surprise.
It’s best to avoid leaving the last of the trash in the trashcan. If you can, work out something with a neighbor, or spring for the city to make a special pick up.
Home How-To Manuals
It’s a kind gesture to gather appliance manuals and warranty cards all in one place. Other useful tips to the new owner like trash days, nearby restaurants, and cell phone dead zones are great to pass along.
Handing Over the Keys
In many home sales, the seller and the buyer never meet. The buyer most often does the final walkthrough with either their agent or your agent and does a sight check to make sure all of the repairs and changes negotiated upon in the contract were addressed.
When it comes time to close, you will bring the keys to the escrow officer/closing attorney’s office on the day of the close, and hand them over once all the paperwork has been signed. The keys will then be delivered to the new owner after the change in deed is registered by the county. After that, your home is sold!