If you were to go to a local courthouse you can find property records detailing real estate ownership in your community — sometimes records that date back hundreds of years. These records are important because they provide today’s owners with proof that they have good, marketable and insurable title and ownership to the property they are selling. Equally important, such records enable buyers to provide proof of ownership when they sell.
The closing process, which in different parts of the country is also known as “settlement” or “escrow,” is now much more computerized and automated. In most cases, buyers and sellers do not attend a closing meeting at the same time; most paperwork can now be sent to the closing officer electronically, signed electronically and signed paperwork sent via email or secure portal.
In practice, closings bring together a variety of parties who are all part of the “transaction” process. For example, while the history of the property ownership has been checked, it’s possible that the records contain errors, unrecorded claims or flaws in the review itself, thus title insurance is necessary. At closing, transfer or excise taxes must be paid and other claims must also be settled (including closing costs, legal fees and adjustments). In most transactions, the escrow officer completes the paperwork needed to record the loan documents.
One of the best parts of settlement is that buyers and sellers need to do very little. Before closing, buyers typically have a final opportunity to walk through the property to assure that its condition has not materially changed since the sale agreement was signed. You may also be inspecting work or repairs completed after the inspection process.
At the closing itself, all papers have been prepared by closing brokers, title companies, lenders and lawyers. This paperwork reflects the sale agreement and allows all parties to the transaction to verify their interests. For instance, buyers get the title to the property, lenders have their loans recorded in the public records and state governments collect their transfer taxes.
Settlement is a brief process where all of the necessary paperwork needed to complete the transaction is signed and notarized. Closing is typically held in an office setting, sometimes with both buyer and seller at the same table, sometimes with each party completing their papers separately. Whatever the case, the result is that title and ownership to the property is transferred from seller to buyer.
The buyer receives ownership and the seller receives payment for the home. From the amount credited to the seller, the closing officer subtracts money to pay off the existing mortgage and other transaction costs. Deeds, loan papers, and other documents are prepared, signed and filed with local property recording offices.
You’ve done it. You’ve looked at properties, made an offer, got it accepted, obtained financing and gone to closing. The home is yours. Is there any more to the buying a home that you should do? Yes, there is!
Those papers you received at settlement are extremely valuable, so hold on to them. In the short term they can help establish tax deductions for the year in which the property was purchased. In the future, such papers will be important for tax purposes when the property is sold, and in some cases, for calculating estate taxes.
Also at closing, determine the status of the utilities required by the home, items such as water, sewage, gas, electric and oil service. Utility bills should be paid in full by owners as of closing and you will want services transferred to your name for setup of the new account and billing. Usually, such transfers can be done without turning off the utilities. Your Seattle Area Real Estate Team broker will provide contact numbers and related information for that.
It is generally understood that sellers will leave homes “broom clean” when moving out. This expression does not mean “spotless.” Broom clean means the house is ready to be cleaned and potentially painted. Frequently a buyer will want to have a professional cleaning company come in and deep clean the house if the seller did not have that done before closing.
For most owners a home is the largest single asset they hold, so it makes sense to protect that asset. Many owners make a photo or video record of the home and their possessions for insurance purposes and then keep the records in a safety deposit box. Your insurance provider can recommend what to photograph and how to secure it. You want to maintain fire, theft and liability insurance. As the value of your property increases such coverage should also rise. Again, speak with your insurance professional for details.
You should change the locks shortly after closing as you never know who might have copies of keys even if the seller has provided you all that they had. If you are in need of any assistance with your property, our team maintains a list of contractors that we recommend so reach out anytime for input on that.
Lastly, enjoy your new home. Owning real estate may involve contracts, loans, and taxes, but ultimately what’s most important is that home ownership should be a wonderful and rewarding experience. If you have any questions after your purchase is complete, please don’t hesitate to contact your Seattle Area Real Estate Team broker for anything you might need.
Cheers and welcome to home ownership!