Closing The Deal

It is not uncommon for your closing date to be changed a day or so, but your contract is still binding.

What To Expect: When all of the necessary conditions for financing have been completed and your buyer's loan is nearing approval, the closing date will be re-evaluated. It is not uncommon for the closing date to be changed a day or so, but your contract is still binding.

The day of the closing the sellers, the buyers, the agents, and the attorney will gather together (usually at the attorney's office) to transfer the property. Sometimes the sellers can go by the attorney's office a day or two early and sign the deed and lien waiver. If this is done, it may not be necessary for the sellers to attend the closing. We like to get the HUD a day or two early to make sure that the amounts represented are accurate. As your agent we can sign the HUD on your behalf if the deed and lien waiver have already been signed.

All payments by you and the buyer will be detailed on a standard HUD form. You pay for seller closing cost and the buyer pays whatever is owed on the down payment plus the buyer's closing cost. You will receive, after the closing, any money kept in escrow for taxes, insurance and unused prepaid items, such as mortgage insurance. Typically you can expect the following refunds on items not used:

• Insurance premiums you've already paid.
• Interest on the mortgage you've already paid for the portion of the month after the settlement.
• Property taxes you've already paid.
• Utility deposits held by gas, water, electric, and phone companies.
• Remainder of any service contracts you've already paid.
• Balance of any escrow funds held by your mortgage lender. You will receive these funds either at closing as a credit or within 7 to 10 working days, depending on where you live.

After all the papers have been signed and checks have changed hands, you turn over your keys and the home is sold. The transaction is considered officially settled when the sale is officially recorded.

What to Bring: There are a few basic items you will need to bring with you to the closing. Here is a brief list of the most common items:

• Your driver's license.
• All the keys to the home. Remember to bring garage door openers, garage and shed keys, pad-lock combinations, mailbox keys, swim or clubhouse keys and the code for the security system.
• Warranties for all the major appliances and mechanical systems.
• Instructions and manuals on maintenance and operation of equipment.
• Proof that contingencies have been met, i.e.: inspection reports or receipt for repairs done.

Seller's Closing Cost: On closing day, you and your buyer will have a number of details to settle. As a general rule you can expect to incur the following expenses:

1. Brokerage fee (commission) – this figure is a previously agreed upon percentage of the sales price of your property which compensates the real estate brokers and agents involve.
2. Recorded Release of Mortgage – Verifies that your mortgage has been completely paid off by the sale proceeds, usually cost about $30.00.
3. Courier fee to pay off loan – Typically runs about $40.00.
4. Credit to the buyer of unpaid real estate taxes – Depending on how and when property taxes are billed, it's possible that you will have to credit the buyer for real estate taxes that were for the time period you owned the home but will be billed after the closing date of the sale of you home.
5. Attorney Fees for preparing the deed and lien waiver – Typically runs about $100.00
6. State Tax Stamps – you take the sales price of the house, divide by 1000, and multiply by $2.00.
7. FHA fees and costs - All FHA fees used to be the responsibility of the seller, but they are now negotiable. However, if the buyer cannot pay the fees, and the seller refuses to kick in a few, the lender may not fund the loan.
8. Home Warranty – Many homes are sold with a home warranty, which guarantees to the buyer that all of the mechanical and electrical appliances are working on the day of closing and are guaranteed to work for the first year of ownership. The cost of the home warranty can run from $495.00 to $600.00. While the home warranty is not a required fee, it is becoming more popular. Don't be surprised if your buyer request on and you end up paying for it.
9. Other credits to the buyer – In some cases, sellers give credits to the buyer for things that don't work, or don't look nice, in their home. For example, if the buyer's inspector finds something wrong in the house, you may negotiate a credit to the buyer that will be paid at the closing. The cost of this will vary.
10. Unpaid mortgage or home equity loan or line of credit – At closing the seller must pay off any mortgage and home equity line of credits that are relating to the hoe being sold. The seller must remember that the prior month's statement for the mortgage will not include the interest that is owed on the loan from the last payment date. Almost all mortgages are paid in arrears; you pay last month's interest in the current month. Therefore, if you made your most recent mortgage payments, you will still owe interest for the current month until the loan is paid off.
11. Upside Down Loan – Although it seems unbelievable that anyone could be upside down on their mortgage (that is, owes more on the mortgage than the house is worth), many sellers each year will find themselves in this position. If you do manage to find a buyer, and the amount being paid for the home will not entirely pay off your mortgage, home equity loan or line of credit, you'll have to come to the table with cash in hand. If the lender “forgives” your loan, the IRS may see that as income to you, and you'll be taxed on the phantom income as if you actually earned it. At you marginal tax rate. Talk to your tax preparer for more details.

It important to keep a list of your closing costs, as well as a copy of all your purchase and sales documents, so that you can accurately figure out your home's cost basis.

For more details, check out the IRS Publication 523, “Selling Your Home” at this link: http://www.irs.gov/publications/p523/index.html