A Smooth Closing A Successful Closing As Closing Approaches by wuzhenguang


									A Smooth Closing
If you are in the process of moving from a home you lived in for years, you might be amazed at what
lies beneath all your home furnishings! You might stand in your empty house as the moving van
pulls away; staring at piles of dust bunnies and years' worth of grime that you didn't know was there.
You are tired, and the last thing you feel like doing is scrubbing your house for the new owners. But
leaving your home impeccably clean is one of the most important things you can do to ensure a
smooth closing.

Your buyers will do their "walk-through" before the closing to make sure that all the systems of the
home are in working order and that the agreed-upon repairs were made. They will feel good about
the whole process if they walk into a spotless house. This will be their last opportunity to experience
an attack of buyers' remorse, and your efforts can minimize any second thoughts they may be
having or any crankiness about issues that must be resolved at the closing. If you are not inclined to
do the cleaning yourself, hiring a professional cleaner will be worth the investment.

A Successful Closing
The closing table is where buyer and seller can celebrate the final stage of a successful home sales
transaction. On this happy occasion, you sign the closing papers, trade keys, and wish one another
well. It is to everyone's advantage to prepare for the closing such that all the details are worked out
in advance.

As the home seller, how can you help ensure that your closing is a relaxed, cooperative event? First,
enlist your real estate agent's help to ensure that all issues are resolved ahead of time. Repairs
should be completed, agreements kept, the house broom-clean and ready for the new owners to
move in. The atmosphere doesn't need to become adversarial, and minor upsets should not threaten
the entire transaction. If you anticipate a problem, no matter how minor it may seem, be sure to
communicate the situation to your real estate agent in advance, so that it can be resolved before the
final closing date.

As Closing Approaches
If you are selling a house that is under contract and scheduled to close in a few weeks, what can you
do to make the transfer of ownership as easy as possible for you and your buyers?

Keep in close contact with your real estate agent so that you will know if there are any changes in
the closing schedule. On the day the property changes hands, your house should be empty, clean
and ready for the buyer. Contact all of the utility companies to let them know that you are moving
and give the service company the buyer's name (the buyer must follow up with calls to confirm).
Don't turn off the gas or electricity because the buyers need to confirm that the appliances are in
working order. Let your insurance company know ahead of time that you are selling the house and
arrange for your coverage to be transferred to your new home. The most important thing is to start
the process well in advance in order to avoid any last-minute complications.

Closing Costs
If you are in the process of buying a home, you have probably figured out how much you will need
for the down payment, but don't forget about the closing costs associated with the purchase of any
property. These additional costs can add up to a significant amount.

Closing costs will vary, depending upon the costs of financing your home loan and the time of the
month that you close. Your real estate agent will be able to give you an estimate of all these costs,
including the points on your loan, private mortgage insurance (if required), the title search, title
insurance, attorneys' fees, and any transfer taxes or recording fees changed by local government
agencies. There may also be property taxes, homeowners' association fees and insurance that must
be prepaid.

Closing Dates
The final closing date is an important item in the negotiation of the purchase agreement on a home.
This is the day when the buyers get their ownership papers and the sellers get their money. It is
important to remember that most standard contracts don't pinpoint a specific date, and closings can
be delayed due to factors beyond the buyer's control.

The closing will usually be set as soon as the title search and lender's paperwork can be completed.
However, any number of factors can interfere with the closing schedule. For example, questions can
arise about liens against the property that were paid, but not properly recorded. Items in the buyers
credit history may have to be cleared up. These situations rarely cause the transaction to fall apart,
but they can wreak havoc with your moving schedule. Your real estate agent will keep you up to date
on the progress of your closing in order to avoid delays and minimize any inconvenience.

Closing Paperwork
When you buy a house you are asked to sign an amazing number of documents, especially if you
are obtaining a mortgage loan. It is prudent to read all of the papers before signing them, but it may
not be practical to do this at the actual closing. There is a way you can read everything first without
holding up the closing.

The title company should have the papers ready for your review several days before the closing, but
sometimes the lender delivers the paperwork at the last minute. If you insist on reading the fine print
on every page, you will probably draw some serious groans from the others at the table. One
practical solution is to request copies of all of the standard forms a week before the closing, so that
you can read them at your leisure. At the closing you need only to make sure that the information is
filled in correctly.

Closing Questions
Because of the complexity of a real estate transaction, questions and concerns arise frequently for
those who are buying or selling a home. Most people experience a degree of stress at the closing of
the sales transaction. Both parties are probably feeling nervous and vulnerable as they sign the
papers, and may even be fighting off an attack of buyer's or seller's remorse.

Even though you may be inclined to just sign the papers, it is a good idea to check the paperwork
and ask any questions that come to mind. If you are signing a mortgage or deed of trust, be sure to
review the document carefully. Check the spelling of your name, the property address and all of the
inserted items for accuracy. Since much of the paperwork is prepared on short notice, mistakes are
occasionally made. They are usually easier to fix while you are still at the title office, so don't be shy
about asking questions before you sign on the dotted line.

Closing Tips
The conclusion of a real estate transaction is an exciting time for everyone involved. The closing
table is the ideal place to sign papers, trade keys, and drink a toast to the new homeowners.
Sometimes that setting is filled with tension and pressure as each side tries to work out important
details of the transaction at the last minute.

How can you help make your closing a relaxed and happy one? First, try to get the details worked
out ahead of time. There may be a few unresolved issues, such as repairs that were not completed,
a disappearing dining room chandelier or a pre- or post-closing occupancy agreement. The
atmosphere should remain positive in order that minor upsets will not threaten the entire transaction.
If you anticipate a problem, no matter how minor it may seem, be sure to communicate the situation
to your real estate agent in advance, so that it can be addressed before it has a chance to escalate.

Escrow Rules
The lender is allowed to accumulate a borrower's payments up to a two-month advance cushion at
the end of a year. But if a surplus develops beyond this amount, the borrower is now entitled to an
immediate refund unless the surplus is less than $50. These rules apply to new loans.

Estimated Closing Costs
There is a federal law that requires mortgage lenders to give prospective buyers an itemized, "good-
faith" estimate of their closing costs. Sometimes buyers arrive at the closing with this document in
hand and proceed to question each item on the final closing statement that does not match the
estimate exactly.

These "good-faith" estimates are just that--estimates. The lender's charges will be fairly accurate,
but the charges for attorneys, termite inspections, title insurance, and other items that appear on the
closing sheet may vary from the estimate. Some pro-rated items, such as taxes or homeowner's
association fees, will also be different if you don't close on the date that was used to calculate the
estimate. The purpose of the disclosure law is to give you a ball park figure of your closing costs. But
the estimate you are given won't be to the penny--probably not even to the dollar!

Final Arrangements
Some homebuyers approach the final days of the home sale transaction with great enthusiasm,
feeling utterly confident that the end is in sight, and feeling completely organized about the move.
They have accounted for every detail, contacting the moving company, arranging for the transfer of
their telephone, electric, water, and gas accounts and having the home professionally cleaned. They
start checking off the days until the closing on their calendar. But in reality, the closing may not be
entirely predictable.

It is very useful for homebuyers (and sellers) to remember that closing dates are not set in stone.
Lenders, appraisers, title attorneys, credit check services, and anyone else who is involved in the
transactions can potentially cause a delay in the closing. If buyers keep this in mind while making
arrangements, they can minimize the possible cost and inconveniences due to a delay.

As the closing approaches, the real estate agent will stay on top of the situation and keep in touch
with everyone involved in the transaction to prevent any unnecessary delays.

Handle Needed Repairs Early
There is a standard chain of events that occurs when an offer comes in on a home. After a meeting
of the minds, the buyer often brings in a home inspector who may find a few items that need to be
repaired. The real estate agent gives the homeowner a list of the requested repairs. What comes
In most transactions, the seller will take care of the repairs. Many sellers wait until the week before
the closing to call someone to do the work, because they want to be sure that they are going to
make it to the closing table before they spend money on repair work. If you are responsible for
making repairs to a home you are selling, make sure you have the work done well in advance of the
closing date by licensed professionals who will stand behind their work. If the work is done at the last
minute and is incomplete or unsatisfactory, it could cause complications at the closing. You should
provide the buyers with all the receipts and the names of the persons to contact in case there is a
problem with the repairs.

Moving Day
Here are some tips for coordinating a move that depends on careful timing. Say the closing on the
sale of your home is Friday morning at 11:00, and that afternoon at 3:00 you are to complete the
transaction on the house you are buying. Your sellers are completing the purchase of their new
house on Monday. As sellers, each of you is obligated to leave your house vacant and clean at the
time of the closing. You will each take possession of the home you are buying after the closing.

If you are faced with a game of musical moving vans, you may want to negotiate with your buyers or
sellers to remain in your old house for a few extra days or move your belongings into the new home
a little early. You should draw up a written agreement which details your arrangement, such as the
amount of rent, the move-in or move-out date, and any agreements regarding utilities, insurance, or
a damage escrow. If you need to make special arrangements for your move, let your real estate
agent know and work out the details as early as possible in advance of the closing.

Net Sheet for Sellers
When you consider what price you should accept when selling your home, there are two important
factors that will influence your decision. The first factor is the basic sales price. The second, and
more important, is the amount you will actually receive from the proceeds at the closing.

Your real estate agent will prepare a seller's "net sheet" showing what your expenses will be. This
will aid you in determining who pays what and when. It can help you to focus on the details of the

A seller's expenses will include brokerage fees, real estate settlement fees, title insurance fees and
special assessments. In some cases the buyer may ask you to pay some of the loan fees. Local real
estate taxes will be pro-rated for you and the buyer, and you may be asked to place funds in escrow
for payment of your final water bill. Subtract your mortgage balance any home improvement loans
and other liens against the property that will be paid at the closing to come up with your final figures.

Your real estate agent can go over all of these factors with you when you list your home for sale and
again as offers come in.

Preparing for the Walk Through
When moving out of a house you have lived in for a long time, you may discover years' worth of dust
that was previously concealed by your home furnishings. If you don't have the time or energy to
clean your house for the new owners, a useful option is to pay a professional to do the job.

Before going to the closing table, your buyers will have a last chance to walk through the house and
check the appliances, mechanical systems and overall condition to make sure everything is
consistent with the sales contract. Even though they really want the house, at this point "buyers'
remorse" may be prompting them to look for a reason to call the transaction off. Because an
otherwise minor problem or defect can sometimes trigger last-minute cold feet, your best insurance
is to make the house look great. Everything should be working properly, and all the agreed-upon
repairs should have been made before the buyers arrive to look at the house. You can promote a
more relaxed, positive atmosphere for the closing if you take special care in preparing for the walk-
through inspection.

Real Estate Repairs
In most real estate transactions there are a few responsibilities that the sellers need to handle before
the closing, such as repairs and termite extermination. The deadline for completing these obligations
usually coincides with the actual closing. Many sellers barely make that deadline. Those who wait
until the last minute to handle these matters may miss the deadline altogether or pay high rates in
order to get a plumber, roofer or electrician on an emergency basis.

Your buyers will probably get a structural inspection done after the contract is ratified. Within 10 days
of the contract's acceptance by all parties, the pest inspection should be scheduled. Even though
sellers usually know well in advance what is needed, they sometimes put things off until the buyers
have finalized the loan approval process. Since these repairs will have to be made anyway, it is a
good idea to get them done promptly.

The Good Faith Estimate
When you buy a home, you will pay "closing costs" in addition to the down payment. These costs
include the "points" you pay on your mortgage loan, title and hazard insurance, the title search, legal
fees, and other charges imposed by the lender. These charges vary by state and county, but they
usually represent a considerable amount of money.

Your real estate agent can tell you about the closing costs in your area. Ask your agent for some
general figures when you begin your search for a new home, and use this information as a guideline.
When you apply for your loan, the lender is required to provide you with a "good faith" estimate of
the closing costs. The lender's good faith estimate is usually close to the actual amount, since the
sales contract will have the price and terms of your new home spelled out. As the closing
approaches, your real estate agent will give you a final figure for the check that you will bring to the
closing table.

The Inspection Before Closing
Home buyers will have an opportunity to walk through the house they purchased just before the
closing to make sure it is in the same condition as when the contract was ratified. They will check the
appliances and make sure that the agreed-upon repairs were completed.

Buyers usually see their new home empty for the first time just after the movers have left. Suddenly
they see the dark rectangles and nail holes where pictures used to hang, and all the "dust bunnies"
that were concealed by furniture. The contract calls for the house to be "broom clean" and free of
trash and debris. However, real estate agents encourage sellers to leave their homes impeccably
clean for the pre-closing walk-through inspection, and many homes are turned over in spotless

Sometimes the seller's hectic moving schedule, fatigue, or unequal housekeeping standards require
the buyers to clean the house thoroughly before they feel that they can move in. If you are afraid that
a messy house could trigger problems at the closing, be sure to make your house shine for this
important inspection.

The Seller May Pay
The costs of buying a home may be daunting. For example, you may have finally saved enough for a
down payment on your first home, with a little left over to buy the furniture you will need. Then you
hear about having to pay closing costs you weren't anticipating, and this may seem like a real

One way to cover such a shortage is to make the sellers an offer that calls for them to credit you for
some of the closing costs. As a rule, the sellers may pay a maximum of 3 percent of the sales price if
the buyer is putting five percent down. If the buyer is making a down payment of 10 percent or more,
the seller can contribute up to 6 percent of the sales price to cover the buyer's closing costs. Some
items, such as prepaid taxes and the first month's mortgage payment, must be paid by the buyers.
Sellers may also contribute to paying the appraisal, points, title insurance, settlement attorney fees,
state or local transfer taxes and similar items.

Keep in mind that if the credit is included in the price of the house, the appraiser will have to justify
the amount, based on sales prices of similar homes in the neighborhood.

The Settlement
The final stage of a home sale transaction is the time to tie up all the loose ends. The buyer and
seller will sign the settlement sheet at the closing, detailing all of the charges that each party has
incurred during the sale of the house. It is crucial to go over the sheet for accuracy and to make sure
that you understand everything on it before you complete the transaction.

When a contract is negotiated, each side agrees how to divide the loan fees (or points), as well as
the other closing charges, such as state or local taxes or escrow fees. Your real estate agent can go
over the settlement sheet and help you compare it with your purchase agreement. The seller's
charges usually include the brokerage fee, the mortgage payoff, and any charges involved in
clearing the title, as well as pro-rated property taxes, payments for termite treatment and escrow for
repairs that could not be completed by closing. The buyer's costs include charges for the loan and
title searches, insurance and any other legal fees. A good closing officer will go over the settlement
sheet line by line, explaining each item and correcting any misplaced charges.

Walk Through Woes
Buyers can be a little cranky on closing day if things go wrong during the walk-through inspection.
For example, the sellers' dependable old dishwasher might stop midway through its cycle and the
bathroom sink might clog unexpectedly. These situations can create anxiety for the buyers and
sellers, but such problems are quite common and usually simple to resolve.

Most purchase agreements require that the major mechanical systems and the appliances being
conveyed are in working order at the time of the closing. Defects are often discovered during the
structural inspection, allowing the sellers plenty of time to have the repairs made. Occasionally there
are last-minute breakdowns or defects that are not spotted until the walk-through inspection. In that
case, an agreement can be made with the sellers at the closing to escrow funds for the repair or
replacement of the items in question.

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