Walk Through of the Closing Process and Selling Expenses Part II
September 13th, 2007 categories: San Diego Real Estate, Selling San Diego Real Estate
Once the closing date is set, the excitement really grows because you are only a step away from selling your home. It is important to understand the escrow process including looking at the estimated closing costs so that you can stay on top of everything.
The total closing costs involved in a transaction will vary depending on the type of loan the buyer wants, complexity of the transaction and any credits that might be generated during the closing process. These would include, Inspections, Zone Report, Title Insurance, Escrow costs, Brokerage Fees,etc.
When I process a listing, I prepare for you a Sellers Net Sheet to estimate the usual costs associated with selling your home. Once the offer is received, the Buyers may have included in their offer other costs that were not on that first estimate. So I will prepare a new Sellers net sheet specifying those additional costs of selling the home. Yet there may still be additional expenses that were not originally considered. Those may include repairs that have to be made or credits in lieu of repairs that you might consider and agree to.
Understanding the exceptions of what isnt known, lets go through the types of costs that are known. The largest component of the costs is the brokerage fees, commonly referred to as commission.
The next component of closing costs are escrow fees and the title insurance policy for the Buyer. Generally, unless the Buyer states that he/she has no preference, the escrow company that will perform the services of settlement and title company will be known in the contract. Typically there is not a great deal of variance in these costs but many times there are concessions available for lower costs. We will discuss those at the time the offer comes in.
Other fees include recording and transfer fees that cover the legal transfer of the deed from your name to the buyer’s name. Some of these fees are variable depending on the structure of the offer that you receive. As a general rule, if a Buyer is seeking financial help in the offer, they will most likely ask for a lump sum from the Seller towards these non-recurring closing costs. They usually don’t spell out the failure. I will go over with you your share of closing costs and any other additional costs that might be asked for in the offer to purchase when we review the offer and discuss you’re Sellers Net Sheet. It should be noted here that some costs will not be known until after the escrow is opened and the process is well underway. There are a few of the fees that are a percentage of the agreed sales price or based on it in some way.
Some of the other costs as example may be unknown. The Pest Inspection may reveal some findings that will be necessary to be cleared to provide the Buyer and lender a Pest Inspection Clearance. I will always recommend that the Pest Inspection be done prior to receiving an offer so you will know these costs before you are under contract. Even if the home is inspected and cleared, if the Buyer insists on having their selection of a Pest Inspection Company in their purchase contract and if new findings are discovered, these items will need cleared as well. Some inspection companies are better than others, and it is always possible to miss something.
Another area of expense common to a transaction but usually not known in advance are repair expenses. When the Buyer conducts their professional Home inspection, there may be things reported that the Buyer will ask you to pay to repair. Though you may choose not to do the repairs or provide credit for them, the Buyer would also has the recourse of being able to cancel the sales contract prior to removal of the inspection contingencies.
Once all the contingencies are removed the process of Closing is getting near the end. About a week prior to close, the Buyer will do a Walk Through verifying that conditions agreed to have been completed or being none, that the property is in the same condition as when the offer was made and accepted.
The escrow officer will order the loan documents from the Buyers lender and presuming that all conditions of approval have been met, the documents will be readied for the buyer to sign. The Buyer will bring the balance of any monies due for the down payment and the lender will then review the loan documents again to be sure all is correct and oder funding.
Once the funding has taken place, the deeds and other related documents will be recorded and then the escrow is said to have been perfected and is now complete. The close of escrow then is the recording of all the documents officially transferring title from you to the Buyers and providing the Buyer with the keys to their new home.
Thank you for sharing!