A Happy Home Sale Closing
May 23rd, 2011
The Pre-Closing Walk Through Inspection
One way the closing may begin is with a pre-closing walk-through inspection. I would always recommend to a buyer a pre-closing walk through inspection. This inspection ascertains that the condition of the home has not changed since the buyer’s last look at the home. This inspection should be written as a contingency to the offer to purchase and accepted by the seller. If the condition of the home has changed, the problem is much easier to deal with prior to the closing.
The walk-through can happen anywhere from a week before to the day prior to the closing. It is normally coordinated very close to the closing because the chances of the home’s condition changing in a matter of hours is quite small. If the walk-through is the same day as the closing and something has changed, it may be more difficult to correct the problem in a short time frame. If the seller has already moved out of the house, it is easy to walk through and check to observe that the move-out did not damage any walls, floors, doors, stairs, etc., and confirm the seller left the home in the same condition as when it was last viewed.
The Title Company
A local title company creates a legal report,called a title report, detailing conditions affecting the property and the terms agreed to in the offer to purchase that must be satisfied or accepted prior to closing.The actual closing concludes all the details that were negotiated in the offer to purchase at some earlier point in time. While this meeting is somewhat of a formality, both buyer and seller expect to transfer title to the property. This transfer occurs when the seller furnishes the buyer with the deed to the property in exchange for the funds the buyer and seller agreed upon. If the buyer is borrowing funds to pay the seller the purchase price then the buyer must close the mortgage loan “in trust” with their lender to obtain the money beforehand. If the seller has to pay off a mortgage to deliver the property “free and clear”, the seller also has to close “in trust” to obtain a mortgage satisfaction from their lender beforehand.
The title company gathers the documents and the funds “in trust” and delivers the documents to the appropriate parties in a trust capacity if all conditions to the transfer have been satisfied. This process with the receipts and disbursements is documented in the “sellers closing statement”, “buyers closing statement” and the HUD statement, which is prepared by the title company. The real estate agents act to coordinate and insure the parties to the transaction have complied with their contractual obligations. The closing can take place with the buyer and seller in the room, or, with only one party present at a time. The protocol as to whom attends, where it is held and what takes place can vary widely depending on circumstances and the local customs.
Why Should I Rent My Home After Closing?
Generally speaking, it is a excellent practice for the seller to occupy after closing and pay rent on a daily basis for some short period of time. This negotiation is a conscious part of the offer to purchase. The reason for this advice is that, all to often, the closing does not take place as scheduled because of some event beyond the seller’s control. Many times the transaction will close a few days later, but if it fails to close permanently, it can be costly for both parties unless they somehow protected themselves from costs associated with a failed closing. If someone loses a job, has an accident, becomes seriously ill, omitted significant financial information in applying for a mortgage or other possible reasons, it can obviously affect the closing.
Here Is How It Works
If the seller remains in the home after the closing, an escrow is established in the purchase agreement specifically to guarantee delivery of the home in the same condition as when the buyer last viewed it. The seller can pay rent to the buyer after the closing as the closing triggers the cessation of the sellers cost of ownership and the beginning of the buyers cost of ownership.
Additionally, the escrow should also guarantee the date and the exact time of the day upon which the seller will vacate the property or a penalty is imposed. Most often, the penalty is negotiated based on the costs the buyer will incur as the new owner. Real estate taxes, insurance, mortgage interest, and possibly other costs like a hotel room if the buyer is forced to change plans at the last minute with no place to go if the seller fails to vacate. Many states have pre-printed clauses in their state approved forms that simply require a fill-in-the-blank approach to the escrow amount. The rent the seller must pay to occupy their former home and any penalty for not delivering possession on time is held by the title company and disbursed when the contingency is satisfied according to the offer to purchase.
Here is a checklist of some of the items to attend to that will insure a smooth transition:
1. Make sure the home, garage, basement and outbuildings are clean and all personal items have been removed.
2. Locate, tag and deliver keys for all the lockable doors. Collect all keys from family and neighbors. Some buyers re-key the home later as a security precaution.
3. See that no items that were included in the sale were accidentally removed.
4. Do not take anything that is considered an attachment or part of the home. Curtain rods, microwaves, towel bars are just a few examples. If you want to take a heirloom light fixture, take it before you show the home not when you move out.
5. Leave mechanical equipment, appliance operating instructions and mark light switches function with a sticky note if it is not clear what fixture the switch controls.
6. Make sure the lawn is mowed, or, the drive and walks are shoveled as appropriate. Also check to see the garbage has been removed.
7. Make certain all utility companies have been notified of name changes, billing information and dates for the meter readings have been communicated. It is always good to have notes and the name of the person you spoke with at the utility company in the event of a miscommunication.
All Parties Come Away Happy