The real estate closing is the culmination of your effort as the seller, as well as the work of those on your real estate team. You will receive payment for the sale of the property, transfer ownership to the buyer, pay off any mortgages, cover any additional closing fees, cover real estate agency commissions, and receive your sales proceeds, if there are any.
The Real Estate Closing Process
Selling real estate doesn’t have to be a difficult or stressful process, but being well- informed and prepared can make all the difference in your overall experience.
Sellers should seek the support of a qualified real estate attorney and be aware of these four main items involved in the closing process.
Final Walk-Through
Most sales contracts give the buyer one final opportunity to do a walk-through of the property within 24 hours of closing. At the walk-through, buyers can check the condition of the property and review the agreed-upon repairs.
Typically, this part of the process is problem-free as all issues should have already been addressed by the seller. The final walk-through simply provides buyers peace of mind, knowing that you, as the seller, have adhered to the conditions of the sales contract and completed required repairs.
Closing Documents
It’s a common myth that, at closing, all parties must be seated around a table together to distribute paperwork and keys when, in fact, the closing does not require the presence of the seller at all.
For sellers who are out of the state, out of the country, or who are simply concerned about scheduling, this fact is often a relief. A generally simpler experience compared to the buyer, the closing package for a seller often only contains a small number of documents, while the closing package for a buyer could be much larger.
Both the buyer and the seller will receive a Closing Disclosure, also called a Settlement Statement. It summarizes all funds the buyer and seller receive at closing, and all monies the buyer and the seller pay at closing.
A deed, conveying the property to the buyer, will be signed by the seller. The seller will also sign a Certificate of Title, certifying that they have the right to sell the property. The seller will then sign a bill of sale and a statement of closing costs for personal property.
Taxes Due
Sellers should be aware that taxes may be due on the sale of their property, The closing attorney is responsible for informing the IRS of the sale. When the deed is signed, the closing attorney may give a 1099-S form to the seller. The IRS receives the 1099 at the end of the year, which includes the complete sales price of the asset.
The likelihood that a seller owes taxes on the sale will depend on a number of variables. On all or a portion of any profit, sellers could be required to pay capital gains taxes. In other circumstances, they may not owe anything.
Sellers should always seek the advice of a tax expert to ascertain any potential tax obligations that may be relevant to their specific circumstances.
Disbursement of Proceeds
Only when the closing has been completed, the closing attorney is permitted to release funds. Sometimes, this cannot be finished the day closing papers are signed. The money may be transferred after the close of business on the following business day.
The seller will receive the money, and the buyer will receive the keys to the newly purchased property once the closing process is properly completed.
Ready to Sell Your Property?
If you’re not a real estate attorney or a realtor, the process and documents involved in a real estate closing can be confusing and intimidating.
Whether you are buying or selling, it is important to have your interests and rights protected during the closing process. At Apfelbaum Law, our attorneys will answer your questions, advise you throughout the process, and provide you with the information you need to make informed decisions. Contact us today to schedule a consultation.
