Home Sellers Handbook
Closing on Your Home
The closing is the day you and your buyer (as well as real estate agents and the closers and/or attorneys involved in the home sale) get together to make sure all the terms of the purchase agreement have been met. For the buyer, closing means signing stacks and stacks of papers. For the seller, it means signing and delivering a deed to your property and signing a few other papers, such as the Settlement Statement or Closing Disclosure required
by federal and state law, which lists all the closing costs. For both parties,
it also involves a lot of money!
When Should You Schedule the Closing?
When you sign the purchase agreement with the buyer, you’ll agree on a closing date. Make sure the date is a minimum of six weeks from the time you make the purchase agreement to allow both parties time to follow up on their end of the purchase agreement. That way you and the buyer will have plenty of time to get all the paperwork in order. Most closings are scheduled at the end of the month to avoid having the buyer pay additional interest on the loan. Don’t close on the last day of the month, instead allow yourself a few extra days in case there is a problem. Although the closing date is negotiable, it is often dictated by the type of loan the buyer obtains.
Do You Need a Closing Agent?
In some communities, sellers aren’t represented at closing by a closing agent, although usually they are. This is a simple matter of traditional industry practice in different areas. You may need to hire either a closing agent or a real estate attorney to prepare your deed and a few other closing documents. If so, shop around for one with a good reputation and a reasonable price. Ask friends who they used, or ask a real estate agent or a real estate attorney to recommend a closing agent. Keep in mind that you have no obligation to use the closing agent recommended.
Some listing agreements will have you designate, at the time of listing, a closing agent. You can, however, indicate that you will decide on a closing agent at a later time.
If you don’t have title problems to clear up, you may be able to rely on the buyer’s closer to oversee the entire closing process.
What Will You Pay to Close?
“Wait a minute. You mean I have to pay closing fees when I’m selling my home?” Yes, it’s true. While buyers cover most of the closing costs, you owe some too.
Check your Settlement Statement or Closing Disclosure for a list of all fees you owe. Check the math, too. Mistakes can cost you money. Request that the closer furnish this list of costs to you before the closing. The following is a list of closing costs that sellers in Minnesota typically pay:
- Real estate commission: Any sales commissions you’ve agreed to pay real estate agents.
- Abstract or title search: The cost to update your abstract and check the title.
- Recording fees: The cost to file the deed and other proper documents with the county satisfying your mortgage and clearing up any other title problems.
- Real estate taxes and assessments: You may owe property taxes, or if you’ve already paid them for all or part of the year, your buyer may need to reimburse you.
- State deed tax: In every county in Minnesota you must pay a state deed tax. You should check with the county in which the deed will be recorded to determine the applicable tax.
- Conservation fee: Some metropolitan counties collect a deed transfer fee which is used, in part, to fund the Minnesota Conservation Fund.
- Closing fee: What you pay a closing agent, if you hire one.
What Can Go Wrong?
Unfortunately, a few things can delay the closing. These include:
- The buyer’s loan isn’t approved.
- The appraised value of the home is lower than the price your buyer agreed to pay.
What Can You Do?
Besides crossing your fingers, here are some suggestions:
- Be prepared to negotiate. If an inspection turns up problems, will you be willing to kick in some money for repairs? If the appraisal is low, will you lower your price? You should know about these problems before the actual closing date, so you can resolve them in advance.
- Keep buyers in the wings. Don’t lose the phone numbers of potential buyers after you have signed the purchase agreement. If your sale doesn’t go through, get on the phone (or have your real estate agent call) and ask other potential buyers for bids.
After Gloria Slivers made her bid on the Kline home, Jim and Cindy continued to court potential buyers. One day a man named Michael Moss stopped by without an appointment. The Klines let him tour the home anyway. They’re glad they did because he bid on the house the next day! He offered $185,000—$2,000 more than Gloria. The Klines exercised the right they reserved under the purchase agreement and asked Gloria to remove the contingency that she sell her home. Since she hadn’t sold it and was unwilling to lift the contingency, the Klines were able to accept Michael’s offer!
Congratulations! If you’ve been following this guide step-by-step, you now have sold your home. Take a break to celebrate. Then clear up a few nagging details.
