The day of the sale – what happens?
When you are selling a home, the closing day becomes the most important part of the entire selling process. While you are giving away your property, you are also getting paid in full and settling any debts or mortgages. For sellers that are already in the process of acquiring a new home, this day is especially important, and it has to go flawlessly and without hiccups. This is why our article is here to get you through the day successfully.
What does closing mean?
When we speak about closing, we refer to the part of a buying/selling process when all lose ends are tied up. This means that money and documents and ownership rights are transferred between all parties involved in the process.
If you still have ongoing mortgages on your home, the closing is the time when these debts are settled. The remaining proceeds are then yours. The buyer transfers funds to you, while in exchange, you transfer the ownership rights to the home (and here we refer to every paper-work and document involved). Lastly, all parties involved on your side of the house-selling process are also paid off.
Usually, all contingencies included in the contract are completed until the closing day, but exceptions might arise, where a contract binds you to certain obligations even after the closing. A good example would be work you still have to do on the house (repairs, modifications) even after the rights have been transferred to the new owner, based on previously negotiated terms.
Closing can often become a complicated process, with attorneys, your own loan agencies, the buyer’s loan managers, real estate agents, and other parties being involved. To ensure that the process goes smoothly, sellers usually hire the services of an escrow agent, also referred to as a settlement agent.
These agents are tasked with handling all documents and finances between the parties involved. The escrows pay off sales agents, pay off property transfer costs, pay off old lenders and manage the paperwork needed to finalize the deal.
How does the process in itself works
In most cases and states, the closing takes place at the escrow’s offices. Normally, the escrow is the insurance company that handles the buyer’s affairs. There are some states that handle things differently though, for example the state of Alaska, where the closing takes place at an escrow agent’s office or at a lender’s headquarters. There are even cases where, for the sake of convenience and comfort, escrow companies send out their representatives to a location agreed upon by both the buyer and the seller.
Even the credit or loan manager of a buyer can host this process, and an attorney or a notary can take up the role of an escrow agent. However, given the recent difficulties in the real estate market, it’s unlikely for an attorney to have the power to transfer funds, so the employment of an escrow agent is more often than not inevitable. It’s a matter of state legislation and preference, but in...