Note: This is a chapter in my new ebook called The Ultimate Guide to Buying (and then Selling) Your First Home. I will post a chapter a week. If you like what you read, you can pick up a copy here for the price of a candy bar! Buy a candy bar or be a real estate guru! The next chapter is about closing on your home. This is the last chapter in the book.
“Congratulations! You have made it all the way through to closing.” I told Steve and Sally over the video call the day before we were set to sign the paperwork. I continued with them. “After all the hard work, you are going to be handing the keys of your home over to their new owners. Most find it a mixed bag of emotions. It is bittersweet as memories are made in a home and you are now leaving it. You are excited because the long process is finally come to an end and nervous about signing legal documents.” Steve smiled and asked if we need to be worried about anything. I replied that it is not a done deal until the mortgage company releases the funds to title. However, for the most part, closing is a time of satisfaction and relief. I asked the couple if they had any questions. They had three for me.
1.What exactly happens at closing? – Sally asked this one. I replied “Closing is when all the required paperwork is signed to transfer ownership of the property to your buyers. The escrow agents will have all the documents prepared beforehand by reviewing the purchase contract and supporting documents. All fees are paid at closing including title searches, taxes and other closing costs (such as any outstanding liens). Since you are the seller, you will have all the expenses debited to your balance. Of course, if you end up owing more than you make from the property sale, you will need to make sure to bring a cashier’s check in the amount to closing, which the title company will let you know the correct amount. Please also make sure to bring a picture ID. Finally, don’t forget to bring things from the house to give to the buyers like the house keys, garage door openers and appliance manuals.” Sally said she understood and wrote down what they would need to take to the closing.
2.When will you get a check? – Steve asked this question. I responded. “If you do end up making money on the sale of your home, you probably expect the get the funds immediately. However, this is not always the case. It depends on several factors. First, when are you closing on the home? Is it 5 pm Friday afternoon? If this is the case, some lenders might not fund it until the following business day. When are your buyers signing the paperwork? If the buyers are closing after you do, you will not get a check because lenders will wait until their clients have signed before releasing funds.” Steve frowned at this and asked what happens if there is a delay in funding. I replied that some banks might delay funding for hiccups on the buyer’s side. Be assured, however, if you are due funds, you will get them. You just might not walk out the door with money burning a hole in your pocket.
3.When will all this end? – Sally asked. I reminded them that the closing is not the end. I responded. “You might think closing is the end of the process. It can be if everything goes according to plan and your buyers are happy with everything. However, this is usually not the case. The first item to understand is that sales contracts are perpetual in nature and continue past the transfer of ownership. It can be a big deal for the buyer if something is not to their satisfaction. For example, the repair you said you did was not performed up to the buyer’s expectations. You might be asked to provide further funds to make the repair right.” I continued that there are other more minor items that often come up in the sale of a home. “For example, you might leave some property behind, or leave trash on the curbside for pickup that never gets picked up. Or, the new owners could have a question about some feature of the home. For the most part, you can expect to continue to have interactions with the buyers for some days or weeks after the sale.”
Steve and Sally smiled and said they understood. Both were clearly relieved that their home selling business was about to come to an end. I congratulated them again and told them I would see them next week. We did have to delay closing once because the buyers forgot to sign the required paperwork in time for the closing to happen. We scheduled it three business day out since the law says you must wait three days for a buyer to sign the mortgage paperwork after signing off on the mortgage. In the end, all paperwork was signed, and the house sold. I had two happy clients who could not look forward to their next chapter in their lives.