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Residential Closing Checklist
for Sellers
By:
Gregory Braun, Partner
Residential real estate closings are increasingly complex these days because of more stringent lending requirements, governmental regulations and title company procedures. Sellers can help the closing run smoothly by following each of these steps before heading out to the title company or sending an attorney to the closing.
Personal Property:
Have you left behind all the personal property items required in the contract, attorney review, MLS listing sheet or brochure? Think about items such as the basement refrigerator, battery back-up sump pump, mirrors, chandeliers, planter boxes, swing set, curtains, blinds and shelving. Ask your realtor or attorney if you are unsure. Likewise, make sure you have not left behind items the buyer did not expect to be left (i.e. paint cans, shelving and unwanted furniture).
Inspection Items:
Review with your agent or attorney all the needed repairs and provide paid receipts for all the repaired items. Arrange a thorough cleaning of your home, including the appliances. Don’t try to cover up damage or stains with rugs or furniture, as this tactic can lead to ugly disputes with the buyer. Try to put yourself in the buyer’s shoes if you’re unsure whether you need to make a repair – would the disrepair surprise you if you were the buyer?
Loan Payoffs:
Is the sale price and payoff information correct on your closing documents? Were you given credit for any items to be credited to your account (i.e. tax escrows)? Normally, the lender mails escrow balances after closing so make sure your lender has your forwarding address.
Moving:
Do you know what day you must vacate the property? Normally, the buyer expects to walk through a vacant home and take possession at the time of closing. Make sure you clarify this with your agent or attorney if this is not the case.
Movers:
Make sure your movers are confirmed and that they have the proper sized crew and truck to efficiently complete the move. If the truck is too small, then the move may become long and complicated. Also, consider whether you own any items that are difficult to move and determine ahead of time how you will package and safely transport these items. Will large items get out of the present home and make it through the new front door and up any necessary stairs? Do you have the proper tools to disassemble larger items? It may take a metric socket wrench to disassemble the bed. Make sure you know what form of payment the movers take; many do not accept personal checks.
If you are moving into a condominium, you may need to meet with the condominium board, complete an application, provide interior insurance, reserve an elevator and sometimes put down deposits well ahead of time.
Closing:
It is best not to attend your closing, as the risks of personality conflicts with the buyer during an emotional transaction do not benefit anyone. Normally your attorney has a Power of Attorney to act in your name and for your benefit. Nonetheless, you should review the closing statement to make sure you understand it before the closing.
Identification:
Bring an up-to-date government issued photo ID. Your attorney or the title company will need it to notarize the documents or, if a Power of Attorney will be used, some title companies require a copy of the front and back of your driver’s license. Your attorney will also need your social security number for tax reporting or exemption documents.
Transfer Taxes:
Some communities charge the buyer, the seller or both a transfer tax based on the purchase price. Often times a water bill must be paid in full before the community will issue the required stamps. Coordinate with your attorney which party will make the payment. Also, some communities require a home inspection by the building department. Other communities require a copy of the contract, deed or state transfer declaration. Ask your attorney or realtor about the procedures and be prepared.
In the City of Chicago, the seller’s attorney obtains a Zoning Certification (for 2-5 unit buildings, this certification must be ordered three weeks or more before the closing) and the water certification, but the transfer stamps may be purchased through the title company.
Liquidate Funds:
When reviewing the closing statement before closing, make sure that the purchase price will cover your payoff amount. The balance of your sales price, your loan, commissions, back taxes etc. must be taken into account. You may need to bring money to the closing table, and liquidating the funds may take extra time if they are coming from the sale of stock or a loan from a retirement plan or relative.
Form of Funds:
If you have to bring funds to the closing because your proceeds are less than the mortgage payoff, for amounts under $50,000 you can use a cashier’s check. If the source of your funds is out-of-state, you need to plan ahead as some title companies may not take out of state cashier’s checks. In this case, wiring the funds may be your best option. Funds equal to and greater than $50,000 must be wired, and you cannot break up the payment as a means of avoiding this requirement. For example, if your cash to close is $60,000, you cannot use one cashier’s check for $40,000 and another for $20,000; your only option is to wire $60,000. Wire extra funds to leave a cushion since the title company will not take a personal check. Get wire instructions from the title company, the lender or your attorney well ahead of closing, and make sure your bank notes the title company escrow number on the wire form. The bank will normally require you to be physically in the bank to initiate the wire.
Wire Instructions:
The best way to get the proceeds from your sale is to have the title company wire them into your account from the closing. This makes the funds immediately available, as opposed to a check that may takes days to clear.
Spouse:
Even if your spouse is not on the deed, for a home, your spouse usually must sign the deed to release homestead rights (providing certain protections from creditors).
Home insurance:
Remember to cancel insurance coverage or move the coverage to your new home or apartment after the sale funds.
Disclosures:
Make sure you provide the disclosures and test results you arranged for in the contract stage (well/water, radon, termite and mold). Also, if you are selling a condominium unit, make sure you sent the 22.1 Condominium disclosures and minutes to the buyer.
Walkthrough:
Make sure you know when the buyer scheduled the final walkthrough. During the walkthrough, ask the buyer to verify that inspection items that you agreed to fix have been completed and provide paid receipts to the buyer. Confirm that the required personal property items were left behind for the buyer – if you are in doubt, check with your agent or attorney. Make sure that all appliances are in working order and that there are no leaks or undisclosed damage to the property.
Keys:
Make sure all the keys, fobs, mailbox keys, codes and garage door openers are available to your buyer at the closing. Nothing is more frustrating to buyers than being locked out of their new home.
Utilities:
Make arrangements to transfer the utilities. However, do not shut off utilities before the closing; rather, give the buyer a day or two after the closing to transfer them to their name.
Real Estate Taxes:
Be sure you understand that you will give a tax credit to the buyer for the accrued but unpaid taxes and any back taxes will have to be paid. See Real Estate Tax Basics for Cook County Transactions for more details. Similarly, your payoff to your lender will include the accrued but unpaid interest, as your monthly payment represents the payment for the prior month.
Income Taxes:
Make a copy of your HUD-1 and put that in your tax file.
Mail:
Forward the mail to your new home. This can be done online at USPS.com or by completing change of address form at any USPS facility.
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