What Should a Seller Expect at Closing?

The closing process marks the final stage in selling a property, where ownership officially transfers from the seller to the buyer. During this event, all financial transactions are finalized, ensuring both parties fulfill their contractual obligations. It signifies the moment the seller relinquishes ownership and the buyer assumes it.

Preparations Before the Closing Meeting

Before the closing meeting, sellers undertake several steps for a smooth transition. They must ensure the property is vacant and broom-clean, removing all personal belongings and tidying spaces. Any final repairs or contingencies agreed upon during negotiations must be completed before the closing date.

Sellers should arrange for the transfer or disconnection of all utilities, such as electricity, gas, water, and internet services, out of their name. This involves contacting utility providers to schedule final readings and service termination. Sellers also need to gather personal identification, like a valid driver’s license or passport, for verification. The seller facilitates the buyer’s final walk-through inspection, ensuring property access as agreed in the purchase contract.

Key Participants and Their Roles

The closing meeting involves several key individuals. The central figure is often the closing agent, who may be an escrow officer, title company representative, or closing attorney. This individual oversees the entire closing process, ensuring all documents are signed and financial transactions are executed. They act as a neutral third party, coordinating paperwork and funds.

Both the buyer’s and seller’s real estate agents are typically present, providing guidance to their clients. The buyer and seller themselves may also attend, though they might sign documents separately or be represented by an attorney. Representatives from a lending institution may be present if the buyer is securing a mortgage, or attorneys for either party may attend.

Documents Signed by the Seller

At the closing, the seller will sign various legal documents that formally transfer ownership and finalize the sale.

Deed

A primary document is the Deed, such as a Warranty Deed or Quitclaim Deed, which legally conveys the property from the seller to the buyer. The Deed includes a legal description of the property and the names of both parties, and its signing must be notarized before being filed in public records.

Bill of Sale

Should the sale include personal property, like appliances or furniture, a Bill of Sale will be signed. This document formally transfers ownership of these movable items.

Affidavits

Sellers also sign various Affidavits, which are sworn statements about the property and the seller. An Affidavit of Title confirms the seller’s clear ownership, absence of undisclosed liens, and verifies the seller is not in bankruptcy. If applicable, a FIRPTA (Foreign Investment in Real Property Tax Act) Affidavit certifies whether the seller is a foreign person for tax purposes, which helps determine if the buyer must withhold a portion of the sale proceeds for the IRS.

Closing Disclosure (CD)

The seller will review and sign the Closing Disclosure (CD), a comprehensive document detailing all financial transactions of the sale. This includes the sale price, seller credits, debits, and the calculated net proceeds.

Loan Payoff Statements

If the seller has an existing mortgage on the property, Loan Payoff Statements will be signed, authorizing the closing agent to disburse funds directly to the lender to clear the outstanding debt.

State-Specific or Local Disclosures

Additionally, state-specific or local disclosures may be required, outlining particular property conditions or legal requirements, which the seller must also sign.

Financial Settlement and Funds Transfer

The financial settlement at closing involves a detailed accounting of all funds, leading to the calculation of the seller’s net proceeds. Sellers are responsible for various closing costs, which are deducted from the gross sale price.

Seller Expenses

Common seller expenses include real estate commissions, typically ranging from 5% to 6% of the sale price, split between the buyer’s and seller’s agents. Sellers may also pay for the owner’s title insurance policy. Other costs can include attorney fees, recording fees for transferring the deed, and transfer taxes.

Prorated Costs

Property taxes and homeowners’ association (HOA) dues are typically prorated between the buyer and seller based on the closing date. This means each party pays their share for the portion of the year they own the property. For instance, if closing is mid-month, the seller pays for the first half, and the buyer assumes responsibility from the closing date onward.

Net Proceeds Calculation

To determine the net proceeds, the gross sale price is reduced by all seller-paid closing costs, any outstanding mortgage payoffs, and other agreed-upon debits or credits. For example, if the gross sale price is $300,000, and total seller costs and payoffs amount to $30,000, the net proceeds would be $270,000.

Funds Transfer

Once all documents are signed and funds are collected, the closing agent facilitates the transfer of the net proceeds to the seller. This transfer is most commonly done via a wire transfer directly to the seller’s bank account, typically within one to three business days following the closing. Alternatively, a certified check may be issued at the closing table.

After the Closing Meeting

Once the closing meeting concludes, several final actions complete the transaction. The closing agent records the deed and other pertinent documents, such as mortgage releases, with the county recorder’s office. This recording updates public records to reflect the new ownership, typically within a few business days.

Following the recording, the physical transfer of keys, garage door openers, and any access codes to the property is completed. Sellers should ensure all such items are left for the new owners. Confirmation of the final fund disbursement to the seller’s designated account is also important, typically verified within the promised timeline, often one to three business days for wire transfers. Lastly, sellers should complete any remaining utility transfers or cancellations and update their mailing address with the postal service and other relevant institutions to ensure a smooth transition of mail.