5 Things you should know about Closings…the main event in Real Estate
One of the questions I get asked all the time by both Buyers and Sellers is: “I’m always hearing about a CLOSING – what is it?”
Here are 5 things you should know about closings:
1. What is a closing?
A closing in the State of Michigan is the culmination of a real estate transaction. This is where the buyer and seller get together (sometimes in person – sometimes not) to sign the final papers and transfer ownership. The buyers bring in their down payment and closing costs (the bank/mortgage company brings in the money for the mortgage) and the buyer becomes the legal owner of the property…the sellers, in most instances, receive their money and are no longer the owners of the property. The HUD Closing Statement summarizes the transaction and looks like this.
2. Where do you hold a closing?
In the Grand Rapids area, we hold most of our closings at a title insurance company. Some are located inside real estate offices, while others are in offices in different areas of town. A few even have mobile closings and drive up in a Mobile Closing Van (although they do come into the office to do the closings – I’ve not attended any sitting in a van). The Realtor representing you (either as a buyer or a seller) will let you know well in advance where your closing will be held and at what time. Few title companies do any closings on the weekends or after 5pm – so you will need to coordinate your work schedule around attending.
3. What if you are out of town or can’t make it to a closing – can it still close?
Yes, we have various ways to facilitate closings if you are not able to attend:
a. You can appoint a trusted friend or relative (or even your Realtor) to be your Power of Attorney for your closing. I have served as POA (the acronym for Power of Attorney) in a number of occasions for both buyers and sellers. Make sure your agent knows well in advance you would like a Power of Attorney because this document must be O.K.’d by the lending institutions and there is a charge to record the POA. These charges will go on your Closing Statement. Here is a copy of a general Power of Attorney
b. If there is ample time – the title insurance company can send you the papers which you need to sign – provided you sign them in front of a Notary Public. Usually the package will be overnighted to you for your signature and you will overnight the package back – it is rare this package would go regular mail simply because time is of the essence in the closing process. Time is important because for the seller – each day that a home does not close they are paying interest on the mortgage they hold. For the buyer time is important for many possession issues.
4. How far ahead will I get all my information about my closing?
A closing date (or at least a “not later than date”) is part of your purchase agreement in most cases – so you will have a general idea when you will be closing. Your agent will let you know where and at what time the closing is scheduled.
In an ideal world I would like to have my HUD Closing Statement at least 24 hours before the close so I can go review it with either my buyer or my seller. The buyer needs their numbers so they can get their certified check to bring to the close. The seller needs it often to take to their next closing on the home they are purchasing. Sometimes that doesn’t happen due to the package coming late from the mortgage company – so everyone needs to be patient and keep their cool.
5. Will the buyer and seller finally meet at the closing?
Most of the time – YES! In my closings I like to have the buyers and sellers separately and sign their papers (there is a lot of personal information that many are signing and it seems a bit awkward and sometimes embarassing for some of the parties to the transaction) and then while the closer is making copies (or CDs now) for all the participants – I like to have everyone come together. Here are some of the things that happen during this social time:
a. keys are passed from the sellers to the buyers (if there is possession at close) If possession is later we talk about the best way to have the keys change hands.
b. garage door openers and any other pertinent information is passed on to the buyer.
c. Utility change over is discussed
d. It’s a nice time for the sellers to give the buyers some insight into some of their neighborhoods and the things they like best there – also to tell the buyers about any little quirks about the house that would be hard to figure out when just moving in (like the hidden light switch for the floor lamps, etc.)
e. I like to have the sellers and buyers exchange phone numbers and new adresses for the seller in case some stray UPS packages come through or some mail doesn’t get forwarded correctly
Expect to spend about an hour at a closing and above all – HAVE SOME FUN!! This is the culmination of a lot of hard work by the Buyers, Sellers, Realtors, Mortgage Agents, Title Closers, etc. to make this a win/win for everyone
Let me know if you have any questions about closings – I’m happy to answer any – I’ve been closing homes in the Grand Rapids, Michigan Real Estate Market since 1971 and have lots of varied experiences with closings that I’d love to share.