What to Expect When you Close on the Sale of Your House
The transaction process of selling a house can seem daunting, but with the right information and the guidance of a trusted realtor and title agency, the process can go quite smoothly. To facilitate the closing process, the Seller is asked to provide the following information and documentation prior to closing:
- Existing Owners Title Insurance Policy—this expedites the title search and may provide rate discounts.
- Home Owners Association/Condominium Association Contact Information and Current Pricing Structure.
- Current Lender Information—account numbers, contact information and written authorization allowing Freedom Title to obtain Payoff Information from all existing mortgage holders. Freedom Title can provide the Authorization Forms, or they can be found on our website.
- Termite Service Provider—Contact information
- The last 4 Digits of Your Social Security Number—this may be needed to distinguish between matters such as bankruptcy or judgments against parties with similar names.
The seller will be asked to provide the following at the time of closing:
- Identification—At least one form of identification, a driver’s license or other government picture identification
- Original Powers-of-Attorney to be used at closing
- Collected funds for any money due—in the form of a bank check, cashiers check, certified check, money order or wire
- Any Invoices to be paid at closing
- Original termite letter with paid receipt—without a paid receipt, the fee will be collected at closing
- Social Security Number
- Forwarding address and new phone number
- House keys, garage door openers, etc.
- Spouse—if the seller is married and the spouse is in the title.
Most offers to buy a house are accompanied by a check. This check is generally referred to as the “earnest money deposit.” The basic reason for the deposit is to impress the seller that the buyer “earnestly” intends to purchase the property; a good faith deposit to show the buyer is serious about the purchase.
The amount of the deposit varies from purchase to purchase, depending on a variety of factors. If a property generates a lot of interest, a buyer may make a larger deposit to convince the seller that their offer is stronger than the others. During “hot” markets, deposits are generally larger than during slow markets. The amount of the deposit should be made upon consultation with your real estate agent.
There are reasons to try to keep the deposit as small as possible, but not so small that the seller doesn’t take it seriously. Once a buyer and seller agree to terms, the earnest money deposit is usually placed in a “trust” account. At that point, it is no longer the buyer’s money. The earnest money belongs jointly to the buyer and seller. This trust account may be with the real estate broker or with a title insurance agency or attorney. The deposit should generally not be given directly to the seller.
Generally, when the transactions close the earnest money funds are applied to the buyer’s down payment and closing costs. However, there are exceptions to the rule. Some sellers think that if the deal falls through, the earnest money deposit is automatically forfeited. Some buyers think that if the deal doesn’t close, they automatically get the money back. Neither one is true. It is controlled by the contract. Read your contract carefully to determine what happens to the deposit if the deal fails to close. Since the earnest deposit is held in trust, both the buyer and seller must agree on the disposition of the funds. Neither the real estate agents, their companies, nor the title company or title attorney have any control over this.
Most disagreements are settled amicably and the deposit returned to the buyer, forfeited to the seller or divided per a negotiated split. If no agreement is reached, after notice to both parties, Freedom Title will deposit the money with the Circuit Court in the County where the property lies. After the court resolves the disputes, Freedom’s costs to retain an attorney to initiate the case and represent it during the case will be deducted from the deposit, along with the court costs. The remainder, if any, will be disbursed by the court in accordance with the judge’s order.