What Happens in a Home Closing?
What is a home closing?
You may have heard it called a “closing” or a “settlement” for a property purchase. Either way, this should be a happy day where you get the keys to your new home. It is always a happier day when the buyer knows what to expect and is prepared to finalize all the details. Being prepared makes everything go smoother and stay on schedule.
Closing on a home is crossing the finish line
After saving for years, you finally found a home you are excited about. While it was easy to find a great house, it is always harder to let go of your hard earned money. The day to do that, is the day of closing, which can bring both excitement and the jitters. Many buyers do not think about what needs to happen that day, until shortly before that day. This article will show you what to expect.
Whether you are a first time home buyer or repeat buyer, it’s not an everyday occurrence to be sitting at a closing table. If you have not purchased a property recently, closing procedures have probably changed since last time you bought a house.
The Final Walk-Through Prior to Closing
Typically, you will do a final walk-through just prior to the scheduled closing. If you are not available to do that, we will do that for you…part of our services is that we always do a walk-through prior to closing. We know how important it is…so we always do that with or without you.
A final “walk through” allows a buyer to review the property to ensure it is in the same condition as it was when it was purchased. You want to make sure that nothing has changed. That there has been no damage, vandalism, roof leaks, and that functional items like HVAC and plumbing are still working.
It is also the time to check to make sure all the appliances and any specific items that the seller needed to leave behind, are actually still there. For example anything that was attached to the property needs to still be there…like the light fixtures, mirrors, security system, keys, remotes etc.
It is not uncommon for sellers to take items that contractually must stay with the property…or they might switch it out for something different. Changing anything is not allowed either.
The final walk usually takes about an hour. Contractually, the seller is required to leave all the utilities on for your final walkthrough.
Schedule Time off Work for Closing
A closing will usually last about 1 to 1.5 hours, so with the final walkthrough plus travel and closing, it can be a 4-hour process. A home buyer should schedule a minimum of a half-day off work. The title companies are not open on the weekends or evenings. Homebuyers will need to sign all the closing documents personally.
What happens at Closing?
The home buyer will be signing all the lender and title documents at the Title Company. Sometimes, the stack of papers is one inch thick. The sure thickness of papers to sign is a colossal event, and signifies the amount of debt you are taking on. The closing agent will highlight the main terms of what the buyer is signing at the closing table.
If you as a homebuyer want to read all the documents word for word, it is best to request all the documents ahead of time so you can review those documents at your leisure.
Buyers will need to wire their money ahead of closing, in order to receive the keys at closing. All buyer and seller documents need to be signed, and the buyers and lenders money need to have cleared the title company. Only when the money is funded the closing is completed. Homebuyers can now obtain the keys or shortly following closing.
It is best not to try to move on the day of closing as getting the buyer’s funds to clear may sometimes take longer than expected.
How do Buyers Pay their final “Cash to Close” Monies?
Title companies all request that you wire your final payment for closing. It is instant and verified funds. Cashiers checks are not a widely accepted form of payment due to the possibility of a counterfeit check. That would need an extra step to verify and could delay the closing to the next day.
Wiring your money is not without risk. Over the past several years, hackers have disguised emails similar to your real estate agent or title company that contain the wrong wiring instructions. Buyers might not catch the small change to an email address or the fact the wiring instructions were sent from a stranger.
Then the buyer ends up wiring their money to an overseas bank and not directly to the title company handling the closing.
To avoid wire fraud, all home buyers need to contact the title company directly to verify the wiring instructions, just prior to sending a wire.
In turn, the title company will send the home buyer current wiring instructions through encrypted email.
Are you using a Non-Traditional Bank?
Normally, when you wire closing funds from a large national bank such as Wells Fargo, Chase, Bank of America a wire will be sent to the title company within 1-4 hours maximum for a U.S. wire, However, if you are using a small local bank, internet bank, or a financial brokerage it may take 24-48 hours for the wired money to be received by the title company.
Be sure to check the type of bank you have and wiring procedures so that you can close on time. A few years back, a small local bank in Minnesota was requiring the buyer to fly to Minnesota from Florida to initiate the wire because it was their policy…seriously. After many phone calls, the Vice President of the bank agreed to waive that requirement because the buyers were 30-year customer.
On a few occasions, we have found wire transfers did not get sent. It was caused by communication misunderstandings or input errors from the bank. It can be scary to find out after you sign that your money was not received.
After a wire has been initiated, it is always good practice to confirm that the title company has received the wire before a home buyer walks in the door to sign the closing papers.
How do you close if you cannot attend in person?
If you are paying cash for a property there are very few papers to sign, maybe 5-10 pages. Most of the time on a cash purchase a notary is not required. A home buyer can sign, scan, and email them back to the title company. In this case, it is easy to do a remote closing.
If a home buyer is financing their home and cannot attend a signing in person, then a “mail away” closing can be arranged. This requires advanced prep work for both lender and title company. Either the buyer or title company can arrange for a onsite notary for a small fee to help the buyer with the signing.
There are other options too. If there are multiple buyers purchasing the property, one party can sign for the other person with a fully notarized Power of Attorney. This can be drafted by title company and has to be approved by lender in most cases. This allows one person to sign in person for other parties on the contract.
As of January 1, 2020, Florida will allow for remote notaries. The possibility of remote notaries will open up more opportunities for remote closings on a widespread basis. There are still both lender and title company requirements to get this implemented and fully get this off the ground. However, once title companies do get fully implement, it will be a game-changer for closings. It will be simpler.
Don’t be left in the “Settlement” Dust
A final walk-through and closings go smoothly most of the time. Sellers are to be out of the property on the day of closing, however, there are occasions where things do not line up as expected.
One perfect example, is when we pulled up to the house to do the final walk through on the day of closing and the sellers where just beginning to move. They had already signed their closing papers. We had confirmed a week prior that the sellers would be out by that day.
Not so. It was a mess…junk everywhere.
We waited 3 hours in the area to return to the home after they said they would be done. After driving to the home for a second time the same day, they still were not moved out. We had to delay closing.
The next day, we conducted the walk through, only to find out the sellers left a truck load of garbage in the garage and the property was not clean. This problem was settled with a credit to the buyer, as this was still a seller problem. Sellers are to leave the property clean without any personal junk…it is not up to the buyer to deal with it.
This is just one of many things that can come up prior to closing. Which is why you need an Exclusive Buyer Agent to represent you in your home purchase.
Needing help finding a home? Contact Buyers Broker of Florida 407-539-1053 and let us know how we can best help you.