Closing on Your House – House Selling’s Last Step

Closing on Your House -The Last Step in Selling Your Home

Closing on your House. You are Done!

My previous articles covered, An Offer On Your House – Now What?, House Inspections, What to Expect?, After the Option Period, What Left? Click here to access these 8 other articles on house selling.

This will be the last step in the home-selling process: it covers the survey and the actual house closing.

One last hurdle before closing: the Survey. The survey can show problems with encroachments. Fences are the most common problem. They are are seldom exactly on the property line. Each time they get replaced they can move around. I have seen them off by more than 2 feet; typically the result of dodging ever-growing trees. In a hundred year old neighborhood like the Heights, expect the fence lines to be wrong.

A fence line being off is not normally an issue with the title company and usually easily resolved between neighbors. Bigger problems though are pools built over an easement (Not good…it could be major problem with lender), garages built slightly over a property line. I’ve seen stairs on garage apartments land on the neighbor’s yard. Most of the problems come from old homes, where changes are made over the decades and no one is looking at a survey. People fence off or build into abandoned alleys; fences go off at odd angles to avoid old trees, etc. I even had a case where two adjoining neighbors had a contested 2 foot strip of land. Each had a survey that showed it was theirs. Surveyors tell me that is not uncommon in very old subdivisions.

The Walk-Through. Typically just before closing, a walk-through of the house is done. If there are no unresolved issues, this is done to make sure the house is still there and undamged. I’ve had instances where a roof was torn off in a storm the night before; another where a toilet overflowed. Hopefully you won’t have to deal with a last-minute problem though.

Closing Statement. Closing statements keep getting longer and longer, just like contracts do. More regulations to follow. Ideally, you will get your closing statement (also called a settlement statement or HUD-1) a few days before closing. This depends on the buyer’s lender though. If the lender is slow sending documents to the title company, the title company won’t have all the papers and closing statement until the day before, or even the day of closing.

This closing statement will outline your costs of the buyer and seller. Compared to the buyer, the seller doesn’t have a lot to look at on the closing statement. Seller costs are typically:  Sales commission (obviously the biggest item); pro-rated property taxes (you pay for your portion of the year’s taxes at closing. The new buyer will pay the entire bill at the end of the year); your loan payoff; closing costs (~$500); title policy (rate set by the state, based on sales price of house). Title policy on a $400K house is ~$2550. These are your typical seller costs.

The borrower on the other hand has lots of loan fees, pre-paid insurance and taxes, etc...much more complicated.

Closing and Funding. Closing is the eagerly anticipated culmination of the real estate transaction. In Texas it generally occurs at the title company that is doing the title work and handling the entire transaction.

Funding is the transfer of funds from the buyer and his lender through the title company to the seller. All liens, taxes, commissions are paid at this time too.

The Seller doesn’t have a lot of documents to sign at closing. These are generally: The HUD-1 closing statement, Acknowledgement; (that even though you may have paid for it) the attorney represents the lender, not buyer or seller; IRS Form 1099; the Deed; various affidavits.

The Buyer does have a lot to sign. Lots of loan docs. Expect to spend 30 minutes signing; longer if you like to review all the docs. After all docs are signed, they are sent to the lender for review. If all goes well, closing (signing the huge pile of documents) and funding (the seller actually gets his money) occur the same day. This may be a few minutes after the lender gives final okay, or a few hours for wire transfer. Sometimes though the lender may insist on receiving the original signed documents before releasing funds. This will then close the following day. This may get touchy if it closes on Friday and the buyer wants to move in over the weekend. This probably won’t happen if the buyer doesn’t get his funds until Monday though. Find out beforehand how funding will be handled.

Expect to spend an hour and a half at closing.

Note: In most areas the buyers and sellers close at the same time. This is a good thing because buyers always have questions about the house, the neighbors, lawn care, etc. It’s a nice ritual. This doesn’t have to occur simultaneously though. Maybe schedules conflict, or (rarely) the Buyers and Sellers are pissed off at each other and don’t care for jovialities. Separate closings might be best.

That’s it! Your last step; house closing. You turn over the keys. You have sold your house!