Closing On a House: What Sellers Should Expect

closing

By: Angela Colley

The good news: You’re almost home free (or free of your home in this case). You’ve accepted the buyer’s offer, the negotiations are finally winding down, and there is only one more little box to check: closing.

OK, so maybe it isn’t a little thing. And maybe you’re a little worried something is still going to go wrong. That’s why we’re here to help get you through closing without a hitch—or barely a hitch (hey, stuff happens).

Get the repairs done

First things first: You’ve got to get those repairs done. We get it—the last thing you want to do now is work on a house you are about to sell. But if you agreed to make repairs or improvements, don’t put them off until the last minute.

“Some sellers do try to get cute and wait until the day of closing, but they really should do all the repairs at least a week before closing,” says Joshua Jarvis, founder of Jarvis Team Realty in Duluth, GA. Getting things done ahead of time will give you plenty of wiggle room if something should still go wrong, or if the buyer finds a problem during the final walkthrough (more on that to come).

So check the approved offer, make a note of any repairs you and the buyer agreed on, and get to it—and don’t forget to cover yourself. Save receipts from items purchased and invoices from contractors, and take before and after photos of any work completed. You will have proof that repairs were completed on the off chance that the buyers contest them during the walkthrough or at closing.

The final walkthrough

Before your closing date—often 24 hours before—the buyers and the buyers’ agent will do one more walkthrough of the house (for which you should not be present). They will go through every room of the house, inside and outside—a process that typically takes about a half hour. Some buyers will go into detail, testing every light switch. But in most cases, the buyer is just looking to make sure agreed-upon repairs were made and no new issues have crept up before closing.

“Buyers are basically looking for anything unexpected in the home,” Jarvis says. “Say, for example, there was a rug covering a problem area.” (Not that you would do that, you awesome seller, you.) If the buyers do find an issue, you may have a chance to fix the problem ahead of time.

“In most cases, the seller would be notified immediately after the walkthrough,” Jarvis says.

If the problem is big enough, you may have to delay your closing date to give time for the repair. But that only happens occasionally. Often, the buyers will take a trade.

“Many times, the buyers ask for money instead,” Jarvis says. But once the documents are ready to go, the terms usually can’t be altered to include the new amount, and that is where the trade comes in. “You typically see gift cards or appliance trades [added to the deal],” Jarvis says.

The closing

Many closings go smoothly. By this point, the buyers are excited to get into their new house, agreed-on repairs have been made, and the sellers are ready to get out. If things are going smoothly, the closing for you might boil down to a blur of paperwork. “The sellers sign eight documents and will have to sit through an hour and a half of watching the buyer sign,” Jarvis says.

Unless problems creep up—or the buyer wants to negotiate further—you only have two jobs: waiting and reading documents. Some are worth perusing more than others. For example, make sure you pay close attention to the settlement statement. “There are other documents you’ll need to sign like a warranty deed or ‘Don’t sue the attorney’ documents, but the settlement is the most important,” Jarvis says. It includes the money you’re making on the sale, plus tax implications. Make sure to check that these numbers jibe with what you’ve been told and were expecting—and if not, pull your real estate agent or attorney aside and point them out.

Last-minute drama

So what if things aren’t going smoothly? What if the buyers want to negotiate again? The buyer has the right to hash out concerns up until the time they sign the final document and take possession of your house. It makes sense to at least hear them out. After all, you’ve come this far.

If the buyer is negotiating for something you can solve without amending the terms (say, for example, you can offer up the washer and dryer in the house), you’ll probably be able to hammer those details out at closing.

But if you and the buyer have negotiated a lower price at the last minute, you may have to delay closing.

“Big changes just mess the whole thing up,” Jarvis says. “For example, a seller could say, ‘I’ll drop the price by $2,000.’  There’s an amendment that needs to be done and the loan would have to be rerun,” Jarvis says. That could take anywhere from one day to a week, depending on the bank’s turnaround times.

Once the negotiations are handled and the papers are signed, the buyers’ funds are transferred to your attorney, who will handle the payments to cover your loan and pay your real estate team. Thankfully, this part is handled by someone else.

And then comes the best part: You’ll get a check for the remainder, usually the same day in most states.

Now, all that’s left is the fun part: Officially moving out and moving on!

[divider_top]

My Offer Was Accepted—Now What?

offer accepted

By: Craig Donofrio

Having your offer accepted feels great—but for most home buyers, it’s just the beginning. There is still a lot more to be done before you’re over the front threshold. Here’s a rundown of what comes next.

1. Apply for a loan

Unless you’re paying in cash, you’ll need to apply for a mortgage loan (if you’re already pre-approved, good for you). If you’re not pre-approved, meet with at least two or three lenders and compare their loan options. Be prepared to ask questions, and be completely open with the lenders about your finances.

2. Home appraisal and inspection

The next step is getting your home appraised and inspected.

Your lender will require your house be appraised by a professional, who is usually provided by the lender. The appraisal gives you a detailed report on the value of the home. If the home’s appraised value is less than the purchase price, you will need to either make a greater down payment or negotiate with the seller to lower the price. A lender won’t give you a loan for more than the appraised value.

A home inspection tells you if the home has any issues. Inspections aren’t always required, but you should absolutely get one even if you’re not getting a loan. Go over the inspection report in detail with the inspector to make sure you’re familiar with any problems, their severity, and the estimated cost to fix them. Additionally, you may also want to get your home checked for radon and pests, which are additional costs.

If the inspector finds problems, you may be able to get the seller to pay for necessary repairs or lower the price to adjust for the cost.

3. Get your funds ready

Make sure the funds you need for closing and in reserves are both accessible. If you need to pull money from an investment, do it right away. Keep the paperwork for the transaction to show your lender you liquidated funds to get your down payment.

4. Find homeowners insurance

In most cases, buyers are expected to pay for homeowners insurance upfront, before closing. Depending on where you live, you might need extra insurance, like flood coverage. Shop around at several different insurance companies for the best rate. Your lender will need proof of insurance before approving your mortgage. 

5. Final walk-through

You will be allowed to do a final walk-through of your new home 48 hours before closing.

This allows you to make sure any items that should be there, as per your contract, remain. It also lets you check the condition of the home to make sure no extra damages have occurred. If you find anything different from what you agreed upon, you may postpone the closing to give the seller time to fix the problem.

It’s important that you catch every issue during the final walk-through. If you spot them after closing, they’re going to be your problem.

6. Closing

This is the day when you sign the mortgage documents and officially gain ownership of the property. Most likely your Realtor® will be there, as well as the seller, the seller’s Realtor, the closing officer, and perhaps the mortgage broker.

You will need to bring ID and a cashier’s check to pay closing costs, which you will know in advance (and if they look different, don’t be afraid to walk away). Your spouse will also need photo ID. (In some states, spouses are required to attend and sign papers even if they aren’t on the mortgage.) Check with your Realtor about the details of your closing.

Updated from an earlier version by Laura Sherman

[divider_top]

How a Bad Home Inspector Can Jeopardize a Sale

home inspection

Home inspection represents a key piece of the home-buying process –– an expert eye that gives an invaluable assessment of the biggest investment a buyer will make (and that a seller has previously made).

A good home inspector can ease the process and make sure there’s no surprises.

A bad home inspector can jeopardize a sale, hurting both sides of the real estate equation.

Here are a few ways to protect yourself against an unqualified home inspector.

A Note for Sellers

A lot of information about inspections aims at buyers, but they can help sellers.

You may even want to invest in an inspection before you put the home on the market, so you can fix potential issues, adjust the price point, or know what to expect at the negotiating table.

Remember to prep as much as you can to make the inspector’s job easier.

What to Look For

When hiring a home inspector, make sure the person doing the inspection is recommended by a reliable source.

You can consult the Better Business Bureau or the American Society of Home Inspectors (ASHI) to find a professional home inspector in your area. Ask friends and relatives who recently bought for recommendations. Your real estate agent might have someone they trust as well.

Find out what kind of qualifications, education, experience and credentials a potential home inspector has and whether they have a license. Do they engage in continuing education? Ask for references from former clients.

A home inspector should also have insurance, so ask what is covered in their insurance. It could be only the cost of the home inspection—or it might be more.

Request a Sample

A good inspector should provide one if you ask. He or she may offer an inspection checklist, but that doesn’t include enough detail to show what clients can expect in a report.

If the sample report is only a few pages long, this is an indication the prospective home inspector isn’t thorough enough. Some agencies may include a sample report on their website, so you don’t even have to ask.

Also, ask if you may accompany the inspector as he checks out the house. Agencies like HUD and the ASHI encourage this, so a buyer can see the home through expert eyes.

If an inspector balks at this request, it’s a red flag.

Customer Service

Does an inspector pick up the phone when you call, or return calls in a timely manner? Does the company take the time to answer your questions? Your purchase is a huge investment, and you deserve someone who will help you make a wise one.

If issues arise the seller needs to fix, what’s the inspector’s police on re-checking the property? Can you ask questions about the home inspection after they’ve sent you the report?

Good customer service will be a positive recommendation and will enable you to find someone you can trust.

What to Expect

Know what you’re getting for your money.

The average home inspection costs $300 to $500. You get what you pay for, so don’t try to economize on a home inspection.

A so-called bargain might end up costing you more in the long run if they miss “surprises” like foundation issues or electrical problems.

You should receive a report in about 24 hours, with photos, anywhere from 20 to 65 pages.

Based on an earlier version by Wendy Dickstein.

[divider_top]