Closing day refers to the date mutually agreed to by the seller and buyer for the transfer of funds, title and the keys (usually the next day). This can be a stressful time for both parties considering that this may be the largest sale or purchase of a lifetime. A few essential preparations can make the transaction flow smoothly.
Whenever possible avoid closing on a Friday, at the end of the month, or before long weekends. If anything goes wrong the banks will be closed. For example, if you are retiring your mortgage you may face addition interest adjustments if the funds reach the lender too late on a Friday afternoon. The seller may be faced with three extra days of interest (four days over a long weekend!).
Don’t forget your utilities. Depending on your jurisdiction, the buyer’s lawyer or notary will contact the local water, electricity and gas companies to have the meters read as of closing day. However, it may be your responsibility so check with your real estate agent or lawyer beforehand. This avoids any gaps in service for the buyer and extra expense for the seller.
Most other services into the home are the responsibility of the seller. At least a week before the closing date, contact your cable television, telephone and Internet service provider if you have one. Terminating service on or just before closing day can save you additional charges. Adjustments There are also several adjustments to consider. These are designed to settle any expense incurred (or income earned on rental properties) by either you or the buyer as of the day of closing-which is what both parties want. Municipal property taxes, school taxes, monthly condominium fees, utilities, and fire insurance (plus sales taxes) are all common expenses that need to be adjusted at closing.
Any expenses you have prepaid before closing day are pro-rated, with the buyer reimbursing you for the period during which you no longer own the property. Expenses that have not yet been paid, but which apply to the time during which you owned the home are similarly pro-rated and reimbursed to the seller.
If the buyer assumes your mortgage, the outstanding principal plus accrued interest and any funds held in your tax account are also adjusted for, as are first and last month’s rent on rental properties.
Closing day need not be worrisome if both parties plan ahead and review all paperwork carefully. In fact, with enough preparation, closing day should be the beginning of a new chapter for buyer and seller in their new homes.