Helping Home Sellers Navigate the Closing Process

Closing Process Guide for Home Sellers

Whether you’re working with a first-time seller or someone who hasn’t sold their home in decades, it’s always a good idea to let the client know what to expect during the closing process. Help your clients feel more confident about an upcoming transaction with this real estate closing guide for sellers.

What to Expect

Closing is when the buyer and seller fulfill every agreement made in the sales contract. In more general terms, it is a meeting that involves the transfer of money and documents so the seller can transfer possession and ownership of the property to the buyer.

At closing, the seller will need to pay off any existing loans on the property and pay every party who contributed services or documents to facilitate the home sale.

If the seller agreed to make repairs to the home, this should be completed by the closing date, unless the buyer created a separate contract for the repairs to be completed at a later date.

To ensure that the closing process is easy, secure and equitable, both parties will typically agree to hire a third party called a settlement agent. This person will take in all of the money, documents and any other items required for closing. He or she will also pay out the money to clear the title, pay the sales agents, and pay off all the old lienholders, along with lenders and any other service providers.

Where Will it Take Place?

Closing often takes place in the office of the settlement agent, who is typically the title insurance company responsible for insuring the buyer’s title to the home. In some places, however, such as Southern California and Alaska, closing is more likely to take place at an escrow company or the lender’s office.
When asked, some escrow or title companies will agree to send a mobile settlement agent to a location that’s convenient for all parties. In certain instances, the buyer’s lender will agree to host the closing and act as a settlement agent or bring along an escrow company employee or notary to act as a settlement agent.

In some states, the seller will end up closing through escrows that occur over days or weeks. Other states have “table closing” in which the entire closing process occurs at a meeting of the parties on a set date. Be sure your client understands where and how closing will take place given their state’s regulations.

Does Your Client Need to Attend?

Unlike home buyers, who must attend the closing to sign loan documents, sellers don’t have to be present at closing. If your client does not want to attend, they will need to pre-sign the deed and other transfer documents. They may also need to give their attorney the power to sign any incidental documents for the settlement agent.

By not attending the closing, your client may be able to avoid tense conversations with a buyer who could seek additional closing credits or complain about immaterial defects.

After Closing

Closing is finished when:

• The settlement agent pays off the seller’s lender and service providers
• The buyer pays sales proceeds to the seller
• The buyer places the deed for recording
• All transfer documents have been delivered to the buyer

After closing, the seller must relinquish possession of the home. If the seller is not able to move out by the closing date, they should negotiate a post-closing possession or “rent-back” agreement.
After receiving full payment of the outstanding mortgage loan, the lender will deliver a release of mortgage to your client. In some instances, the lender will send the original release to the settlement agent or the county recorder. Whatever the case, it’s important that the release is recorded and returned to your client.

Make sure your client keeps this release and several copies of every other closing document. Their tax preparers might want to view these closing documents when they do their taxes for the year of the sale.

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