Closing the Transaction
Congratulations, you made it to the final step! Real estate transaction closings are typically done through an attorney or title company. Title companies fill the role of an independent, neutral party that coordinates the closing and ensures that the interests of all parties to the transaction have been satisfied. These parties include the buyers, sellers, mortgage lenders, and any real estate agents that were involved (potentially a buyer’s agent for FSBO transactions). Specifically, the title company’s closing agent will be looking at the following items:
- Property title: Property history and ownership are verified to ensure a clean and marketable title without any liens.
- Property taxes: Payment of local and state property taxes is verified to ensure no delinquent taxes are owed.
- Title insurance: A title insurance commitment for the lender’s policy is prepared and both the owner and lender are issued coverage.
- Property survey: Many lenders require a property survey showing the property’s legal boundaries.
- Loan/mortgage documents: The title agent will coordinate with the lenders to make sure all required loan documents are available for closing. A legally required settlement statement is also completed to show all of the costs associated with the purchase and sale of the property.
- Disbursement: When the closing is complete and all parties have signed and settled, monies are collected and used to pay off the mortgage release and any other vendors that are owed (survey company, title company, etc.)
- Document recording: Title companies also typically take care of properly recording the sale and purchase with local taxing authorities, courthouses, etc.
The services provided by the title company are essential for closing and well worth the nominal fees involved. Unless you have prior real estate experience or legal expertise, it is strongly recommended that a title company or attorney are used to close the transaction.
