The FSBO Sellers Guide to Closing
The contract is signed and the deal is done — almost. While it might seem there is little to do between contract and closing, this isn’t the time to slack off. Follow these steps to a successful closing experience:
• Work with the buyer’s appraiser and inspector
• Make sure the buyer is making progress
• Hire a closing company
• Schedule your move
• Close the deal
1) Expect an Appraiser and Inspector
The buyer’s lender will have to approve the deal, and that involves validating the sale price through a formal appraisal. The lender will choose the appraiser, but the buyer can request an appraiser who is familiar with your new neighborhood. The appraiser will contact you to arrange a time that is convenient for you. Make sure you settle on a date as near in the future as possible. If the appraisal isn’t favorable you need to know that right away.
Meet the appraiser at the house with the listing sheet and your list of improvements and major maintenance items. Also have copies of recently sold comparable properties and any other factors that you believe support the contract price. Accompany the appraiser as he walks your home and answer any questions honestly. Expect the process to take between an hour or two.
If the appraisal is lower than the agreed-on price, you will have to renegotiate the price or abandon the deal. The buyer can request another appraisal, but understand that appraisers’ opinions are supposed to be independent and cannot be negotiated.
An unraveling deal is upsetting to everyone involved. Though it is a bitter pill, you might have to accept that your property is not worth what you thought it was. The only opinion that ultimately counts is that of the appraiser.
The Inspection Process
The inspection usually takes place within a week of signing the contract. The buyer pays for the inspection. The inspector will pay close attention to disclosures you have listed on the required form, which is intended to flag chronic or potential problems with the house. Once again, the inspector will contact you to arrange a time for the inspection that is convenient for you.
The inspector will flag structural and system problems that might soon need repair. Home inspectors usually do not check to make sure that the house complies with local building codes. If you have not gotten the appropriate permits and inspections for home improvement projects, it is your responsibility to get the projects approved by the local building inspector. This might involve paying fines and fees.
If you do not bring your house into code compliance, the buyer has the legal right to sue you for reimbursement for the fines and fees he had to pay to correct your illegal work. If you are in doubt, request an inspection from the local building code staff.
If the inspector finds substantive problems, the buyer will ask you to cover some or all of the cost of fixing them. It is reasonable to ask you to pay for essential structural and mechanical repairs that you would have to address even if you continued to live in the house.
Expect to negotiate on the cost of the repairs. The buyer will ask to have qualified contractors furnish estimates. The buyers might ask, but it is not customary for the sellers to pay for redecorating, new finishes, new carpet, to refinish floors, put in new landscaping or to address other features that are strictly for their preference.
If you can’t agree with the buyer about fixing substantive flaws, the buyer has the right to cancel the contract.
2) Stay on Top of the Buyer’s Progress
It’s important to stay on top of any dates in the contract to be sure the buyers comply. This is particularly important regarding the financing date. If the date is approaching and the lender still isn’t finished with the underwriting of the loan, make sure your attorney is aware of the situation. It might be necessary to extend the date on the contract. Real estate agents often call this “the do or die date,” because if it passes and the financing isn’t in place, there is a possibility that the contract might not be valid.
If you live in a condo or have a homeowners association that requires approval of new residents, be sure to put the potential buyers in touch with the appropriate people as soon as the contract is finalized so there is enough time for the buyer to comply with the association’s requirements.
3) Hire and Work with a Closing Company
To get your transaction closed you’ll need to hire a local title company or settlement agent (depending on the custom in your area) to do a title search and facilitate the closing. Start by asking your real estate attorney for a recommendation about a good local company to use. (Chances are he or she will have one or two local favorites). But you do not have to go with your attorney’s recommendation.
Find local title companies through the American Land Title Association or your state title association and contact those nearby to find out about pricing, years of experience in the title insurance and closing business and availability around the time that you envision closing.
Once you hire a title company or settlement agent you will work closely with that company and your real estate attorney to be certain that you have filled out the forms you need, fulfilled state requirements for transferring your property to the buyer and getting the deal closed.
4) Schedule Your Move
You’ll want to have your moving company hired and the date arranged a least a month before you move, perhaps even six weeks if your sale will close in the spring or summer when moving companies are busiest.
Research local moving companies with an eye toward finding a company with a good reputation that offers a competitive price. Get recommendations about moving companies from relatives and neighbors, or search in our Moving & Relocation Center.
5) Countdown to Closing Day
A few days before the closing, you stage a final walk-through for the buyer. If the date wasn’t stipulated in the contract, schedule one right before closing, ideally after you have moved out. This is the buyer’s opportunity to see that the house is in the agreed-upon condition and that any negotiated repairs have been made. Final walk-throughs can bring surprises; missing or damaged sheet rock that was covered by a piece of furniture or problems with flooring that were covered by carpeting are only a few. Often these are things the sellers completely forgot about, so don’t be clueless. The house should be clean and any trash removed.
After the walk through, have the buyers sign a statement that everything in the home is as it should be and that all work has been completed to their satisfaction.
At the Closing Table
You may or may not meet with the buyers on the day of closing. And the closing itself can take place at the office of your escrow agents, attorney or registry of deeds. It all depends on local custom. Be sure all owners of the property bring a driver’s license or some photo identification to the closing. Also don’t forget the keys to the home and the garage door opener. Make sure to keep any warranty information and instruction books for the new owners. Check with your escrow agent or attorney to see what other required documents you will need. If you are in a condo or homeowners association, check with the escrow agent to see if you need to bring a copy with you.
For the Western half of the United States the actual closing day refers to the date when all closing documents are recorded instead of the day when the buyer and seller meet to sign all of the necessary documents. Once the recording of the documents has been confirmed, funds and final closing statements will be disbursed.
Lenders are picky so don’t be disturbed if they want some last minute document the day of closing such as a proof of employment. The delay is usually not long and in general escrow agents and attorneys can usually work out a solution.
Pay attention to the property included in the contract. If you agreed to include the curtains, don’t take them. The same goes for light fixtures, built-in appliances and cabinet hardware. Unless they were specifically excluded in the listing and in the contract, anything affixed to the house stays. If you plan on keeping a light fixture, cabinet pulls or any other fixture, replace them before you put the house on the market.
Different areas have different practices regarding when sellers have to vacate the property. In part it depends on how the closing and registering of the new deed is handled. In some places, buyers have 24 hours to vacate after closing. In general, most sellers should plan on moving before the closing date. Sometimes, too, buyers and sellers will negotiate a date to vacate. If you are staying after you close, be sure to check out any insurance issues.