Also known as a real estate settlement, a real estate closing is the final process in the completion of the purchase of real estate. In order for the closing to take place, a number of essential tasks are executed, often within a specific order. Once each of those tasks is completed, the closing is finished and the new owner has a clear title to the property.
In most nations, the actual process of the real estate closing begins at the time the prospective buyer and the seller begin to negotiate on the terms of the sale. It is during this time that such details as the total cost of the purchase are established, a decision is made on who will pay the closing costs associated with the purchase, and the actual date of closing that is agreeable to both parties. Typically, the sales closing date is set for several weeks in the future, allowing both the buyer and the seller to complete the tasks that will allow the successful completion of the sale.
To further the process of real estate closing, the buyer will deliver the agreed upon funds for the purchase of the property. There are several methods that may be used to deliver the funds to the seller, or a realtor or agent who is representing the seller. The buyer may pay for the property in cash, or by means of a cashier’s check drawn on his or her bank account. When the buyer has obtained financing to manage the purchase, the bank or mortgage company prepares a check and forwards it to the agent or the actual seller.
Once payment for the property is received, the seller provides the buyer with the tools necessary to enter the property. This usually includes keys to all locks on the exterior and interior doors of the main structure, as well as keys to the doors on any ancillary structures, such as a storage house or stand alone garage. In the event that a security system is still active on the property, the seller also supplies the new owner with the codes used to arm and disarm the system.
The seller also signs over the deed to the property to the new owner as part of the real estate closing process. This is done at the time payment for the property is rendered, and the keys are given to the buyer. From there, the new deed, complete with the buyer’s information, is registered with the local land registry. An attorney, a title company, or even a civil law notary, depending on the requirements of the local jurisdiction may manage this process. In many areas, there is a specific amount of time after the deed is executed that it must be registered with local authorities; failure to do so can sometimes lead to the imposition of late fees or other penalties that must be paid as part of the registration process.
When a realtor manages the real estate closing process, all payments for the property are submitted to the real estate agency, and not directly to the seller. The agency oversees the steps of the closing, deducts its commission as well as fees for various expenses incurred from the total, then forwards the remainder to the seller. In some areas, the process of escrow may be involved. This is simply a means of allowing for the orderly exchange of the payment and the deed to the property without the need for both the buyer and seller to be physically present during the exchange.