Closing

"Closing" or "Settlement" or "Escrow" is listed as one of the top ten problem areas that occurs in a real estate transaction. It is probably the least understood, and most feared, aspect in a property purchase. Misunderstandings about closing costs can result in hundreds or even thousands of dollars of needless expenses, and put seemingly solid deals at risk. This final step to your purchasing or selling a home or property can go smoothly if you take a few precautions beforehand. Knowing what questions to ask and reviewing all documents well in advance of the closing day will prepare you for a hassle-free and smooth closing.

Usually, the contract for sale includes a provision for escrow, which is simply when something is given to a third party (an "escrow agent" or "escrow company") to hold until a certain event takes place, and then the thing is delivered to another party. Escrow instructions tell the agent how to hold and care for the items given to him or her. In a real estate transaction, the instructions are written by the buyer, seller, or lender- the bank financing the deal.

When buying and selling a home, an escrow agent usually does some or all of the following:

• Hold the buyer's down payment until the closing
• Hold the money that the bank has loaned the buyer
• Obtain and hold a deed from the seller transferring the property to the buyer, and arranges for the deed to be recorded in the appropriate county office or agency at closing.
• Figures the amounts owed by both the buyer and seller (at the time of the sale closing) for things like property taxes.

Here are a few common questions to ask:

• How long does a title search take?
• What are the most common ways to hold title?
• How much will the closing costs be and what are they?
• What happens on the day of closing?

This is a list of what the closing paperwork usually consists of:

Deed: The legal document conveying title to a property.

Title: A legal document evidencing a person's right to or ownership of a property.

Title Insurance: Insurance that protects the lender (lender's policy) or the buyer (owner's policy) against loss arising from disputes over ownership of a property.

Home Owners Insurance Policy: An insurance policy that combines personal liability insurance and hazard insurance coverage for a dwelling and its contents.

Mortgages: A legal document that pledges a property to the lender as security for payment of a debt. Instead of mortgages, some states use First Trust Deeds.

Property Tax Bill: Usually the homeowners will provide the buyers with a copy of their property tax bill.

Warranties: Any warranties for the house and its contents (washer & dryer, furnace, etc.).

Surveys: A drawing or map showing the precise legal boundaries of a property, the location of improvements, easements, rights of way, encroachments, and other physical features.

Plot Plans: A diagram showing the proposed or existing use of a specific parcel of land.

Surveys: A drawing or map showing the precise legal boundaries of a property, the location of improvements, easements, rights of way, encroachments, and other physical features.

Water and Sewer Bills: Proof of payment by the seller will probably be required for the Closing.