The Finance Blogger


Real Estate Closings

real estate closing costsI have always found that real estate closings are a stressful event. You are down to the wire and about to purchase a new home or rental property. Your wondering what will go wrong to prevent the deal from going though. There seems to be so many moving parts that you just feel that something will be missed. The whole thing may fall apart.

In reality, if  everyone has done their part ahead of time there is little likely hood of the deal falling through at the last minute. If there is a problem with the real estate deal then you already know that the real estate closing is in jeopardy of falling apart. Lets examine the roles of each of the participants to see what is involved and what you should look for. Each participant has a role and it is important to know who they are.  You have the seller, the buyer, the sellers agent, the buyers agent, the sellers lawyer, the buyers lawyer, the sellers bank, the buyers bank and the buyers home inspector.

Rolls in Real Estate Closings

Buyers Home Inspector – Completes a home inspection and provides a report to the buyers agent and the buyer.

Seller – Once the offer is accepted, there is not much for the seller to do other than be available to sign all of the appropriate documents and also to provide the necessary information to the sellers lawyer so they can complete the deal. This includes current mortgage information, other lien information if it exists, tax statement and the keys so that they can be handed over once the deal is completed.

Buyer – The buyer must waive all conditions for the real estate deal to be able to close. If they do not waive the conditions, the real estate closing cannot proceed until they are dealt with. Usually all four people must get involved to make this happen if there is a disagreement i.e. the seller , the buyer, the sellers agent and the buyers agent. Once all of the conditions are waived the buyer must provide to his lawyer all bank information so that the mortgage can be placed, and he must provide the funds necessary to make the down payment. The buyers agent is usually on top of this and will raise a red flag if the real estate closing is in jeopardy.

The buyer needs to meet with his lawyer to sign all documents and receive the keys once the deal is completed.

Sellers Agent – A good agent who is working for the seller will often need to review any offers that come in and pre-qualify the buyer through the buyers agent as best he can. If there is a tenant involved the sellers agent must give notice to the tenant if the buyer will be moving in to the unit. The sellers agent is usually quite motivated to make sure the deal goes through after all conditions have been waived and will follow up at appropriate intervals to confirm that the deal is still good.

Buyers Agent – his job is to protect the buyer and to put together an offer that is best for the buyer. If there are conditions, the buyers agent should work with the buyer to help arrange for these items to be waived so that the real estate closing can take place. He will follow up with the lawyers on both sides and the sellers agent to confirm that there are not outstanding issues.

Lawyers and Banks

Sellers Lawyer – using the proceeds of the sale the sellers lawyer needs to pay out the bank mortgage of the seller and de-register the mortgage against the property. He will also provide the final adjustments to the buyers lawyer so that items such as taxes, condo fee’s etc are included and accounted for. Once all documents have been cleared, money received and paid, his costs calculated, the sellers lawyer will transfer the remaining funds to the appropriate bank as designated by the seller.

Buyers Lawyer – the buyers lawyer must receive the funds from the buyer and the buyers bank, register the mortgage, have all documents signed, prepare a statement of account and remit the proceeds to the sellers lawyer. He must also confirm there are no new issues that could prevent the deal from proceeding as well as that all conditions are fully waived.

Sellers Bank – Not much for the bank to do here other than provide a statement of the balance to be paid out on the date of the real estate closing. Once they receive the funds, they will discharge the mortgage and update their books.

Buyers Bank- They will need to have pre-approved the buyer for the mortgage. Assuming that this is done well in advance there should be no issue, however some deals do fall through because the buyer was not properly pre-approved. On the day of the real estate closing, the bank will forward the funds agreed to, to the buyers lawyer who in turn will complete his work as stated earlier and then forward the proceeds to the sellers lawyer.

Sounds complicated, however as we said earlier, if all of this work is done in advance the agents are managing the deal, then there should be no problems for the real estate closing. If you are concerned, meet in advance with your lawyer and go over all details.

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