Accepting an offer on a home you’re selling is an exciting milestone. It may even feel like the job is done and it’s time to celebrate. But don’t pop the champagne before you’ve crossed off all the items on this closing checklist.
Closing on a home sale can be more work than one might expect. This final phase represents the legal transfer of your property’s title, and includes such matters as final negotiations, tying up loose ends, and executing the financial transaction.
If it’s a cash offer, then the process can take about three weeks to complete in today’s busy market. If the buyer is taking out a loan, then you’re looking at more like 50 days on average, as of Q3 2021.
In either case, there’s a few hoops to jump through before you can sit at the closing table. This comprehensive checklist outlines exactly what you need to do before, during and after the closing process.
Getting ready for closing
To solidify an offer, a purchase contract must be signed. This legal document details the terms of the agreement, such as who keeps the home appliances, the buyer’s inspection period, how much money the buyer is putting down, and the closing date.
As soon as both parties sign the contract, an earnest effort to meet the agreed upon deadline is set into motion.
“From the time a property is put under contract to the time it closes, an agent or a transaction coordinator makes, on average, about 42 phone calls,” said Shaun McCarthy, a top-selling agent in New Orleans, Louisiana who sold more than $82 million worth of property in the City of New Orleans in both 2020 and 2021.
In most cases, the first order of business will be a home inspection arranged by the buyer.
Some sellers choose to have their homes inspected prior to the buyer’s inspection so they can get ahead of any potential repairs, but McCarthy doesn’t recommend doing this.
“We don’t want sellers coming out of pocket with money to replace something that may not make a difference to the buyer coming in,” McCarthy says.
If your buyer asks for repairs based on the results of their home inspection, you’ll sit down with your real estate agent to negotiate these repairs. Depending on the situation, you might agree to the repair requests and complete them quickly, agree to part of the requests, or deny the repairs altogether. Make sure to speak with your agent to determine what’s fair — and best — for your situation.
If the buyer is financing the purchase, then next on the agenda is a home appraisal. This will yield an appraisal report, which provides an objective, third-party assessment of what the home’s value is.
If the appraisal falls short of the contract value, then there are a number of possible outcomes: the buyer can bring more cash to the table to fill the gap; you can lower the price to match the appraisal; or both parties can agree to meet somewhere in the middle. If a home appraisal contingency was added to the contract, then the sale can also fall through if the parties can’t reach an agreement.
Once over these hurdles, then you’ll want to make the following preparations for closing day:
Clean your home one final time, taking special care to check drawers and closets for items left behind
Gather documents for appliances and other items (i.e. warranties, manuals, receipts, for appliances, roofing, heating, cooling, plumbing, or other projects you’ve had done to the property)
Shut off the main water valve to the property
What sellers should bring to closing
It’s time to seal the deal. In anticipation of the closing meeting, go through this list of items and make sure everything is readily available.
Photo identification of all sellers on the home contract. Best to have two forms of ID
Keys and/or security codes for the home and any remotes to appliances (i.e. garage door, HVAC, motorized window blinds, etc.)
Final utility bills to be paid
Cashier’s check to cover closing costs if you didn’t wire the money already
Personal checkbook in case there are any unforeseen costs to take care of
Proof of repairs made per the home inspection
Check with your agent prior to the closing day to confirm this is all you need. Every state and individual sale can vary slightly when it comes to closing necessities, so there may be additional items to bring based on your situation.
All other essential documents required for the meeting, such as the closing statement, seller disclosures, deed to the home and purchase contract will be handled by either your real estate agent, escrow agent or attorney.
Once at closing, you and your team will sit down with the buyer and their agent to sign all the paperwork and settle the closing costs.
Seller expenses at closing
Aside from any remaining mortgage balance, sellers can expect to pay about 5-10% of the home sale price in closing costs. These include the following:
- Real estate commission (typically around 3-6%)
- Taxes, utilities, insurance
- Escrow, title, and attorney fees
- Warranty payment, if required
- HOA dues, if applicable
The expenses listed above are typical but may not be all-inclusive. Depending on the details of your home sale, you may have additional paperwork to sign or fees to pay. Fortunately, this is one area where your agent will take the reins and let you know what’s required.
If you net a profit after your loan and all agent commissions are paid, you’ll receive a check at closing for the balance. If not, you may need to bring a check to the meeting. If that’s the case, make sure to ask your agent for an exact total so you can bring a cashier’s check in that amount.
Pro Tip: Don’t cancel your homeowner’s insurance or utilities until the transfer of ownership is complete. If anything happens to the home between starting and closing the sale, you’re still on the hook for it.
Final to-do list
Once your home’s closing is complete, it’s time to wrap things up. You should have received a package of closing-related paperwork to file away, along with a check for the proceeds of the sale (if applicable). What’s next? Check out this list of final to-do’s before saying goodbye to your former property.
Change of address. Notify every business, utility and person you can think of that you’re moving, and of course update your address with the post office
Cancel homeowner’s insurance policy. Be sure to do this after the title has transferred. If you’ve prepaid, you may receive a refund
Do you need an attorney?
Some states require an attorney to be involved during the closing process. And even in states where an attorney is not required, it can be a good idea to hire one for the final proceedings to ensure nothing is overlooked and that any unanticipated issues are resolved quickly. In this case, a closing attorney would act on behalf of the title rather than the seller; hiring a seller’s attorney to represent your interests would entail additional expense, borne by the seller.
“We act as a neutral intermediary,” said Conway Bellone, a real estate attorney with True Title in New Orleans, Louisiana. “We make sure the title is free and clear of any liens or encumbrances. That then allows us to facilitate the real estate transaction where we make sure the money is exchanged, the keys are exchanged, and just make sure that at the end of the day the real estate transaction happens.”
Header Image Source: (Matthew Addington / Death to the Stock Photo)