What Actually Happens at A Real Estate Closing?

Real estate closings have a reputation for being stressful, complicated and time-consuming. But do you really know what happens on closing day? Here is our summary of what to expect on closing day and some helpful tips to make sure everything goes smoothly.

The Final Walk Through

The closing process really starts 24 hours before you get to the closing table. Buyers are often given the opportunity to do a final inspection of the property to confirm that they are satisfied with the condition of the property. If the buyer sees any damages or issues that need to be resolved, he or she can negotiate repairs with the seller prior to closing.

At the Closing Table

The purpose of a real estate closing is to formally transfer ownership from the seller to the buyer according to the terms of the sales contract and to exchange the funds needed to close the sale. The mortgage loan is also closed simultaneously.

Everyone involved in the transaction typically meets at the third party closing agent’s office. This is usually an attorney, an escrow company or a title company. The participants include (but not limited to) the home seller, the home buyer, both parties’ real estate agents and attorneys, the lender and his attorney, a representative from the title company and the closing agent.

The first thing that will happen is that the real estate agent will “open escrow” by giving the buyer’s deposit funds to the closing agent and gives instructions for the transaction.

Next, the seller will be asked to provide clear title to the property and the buyer will be asked to provide the funds to close the sale. The representative from the title company is there to certify that the title is clear.  Typically, the buyer will sign the required paperwork to close the mortgage loan at this time and the lender will provide the funds to the closing agent.

The buyer will also be required to pay closing costs to cover transaction-related expenses including:

  • appraisal fees
  • escrow fees
  • loan origination fees
  • notary fees
  • reconveyance fees
  • recording fees
  • taxes
  • title searches
  • real estate agent sales commissions
  • other related fees

Buyers should expect closing costs to be about 4 to 5 percent of the purchase price of the home. The lender will provide you estimated closing costs on the Good Faith Estimate you receive within three days of submitting your loan application. The actual closing costs are available on the business day before closing on the HUD-1 Settlement Statement.

Once all the fees are paid and the closing documents are signed, the closing agent will disburse the funds to each party as appropriate.

Next, the closing agent will deliver the deed and any mortgage documents to the county court house to be recorded as public record.

Closing Day Tips

  • Don’t make any big financial changes before closing. Do not go out and buy a car or sign up for a new credit card right before closing. Doing so could change your lender’s approval of your mortgage.
  • Don’t schedule a closing during your lunch hour. It usually takes longer than an hour. Take half a day or a whole day off work.
  • Avoid an end-of-month closing. You may need a few extra days to resolve any issues. If a problem pushes your close into the next month you may get hit with increased closing costs.
  • Come to the closing prepared. Make sure you bring copies of all essential documents including: Your contract, your inspection, bank documents, mortgage documents, proof of homeowner’s insurance and your good faith estimate.

If you are buying a home this spring, let the lawyers at Perry, Bundy, Plyer and Long help you navigate the closing process and get into your new home without all the stress. Call us at 704-289-2519 to learn more about our real estate law practice and services.