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Closing on a House: Helpful Settlement Advice for Home Sellers

by | Jul 19, 2023 | Blog, Homeowners, News, Real Estate News, Sellers | 0 comments

Closing on a House: Helpful Settlement Advice for Home Sellers

In order to finalize the purchase of a house, it is important to reach the settlement table. Although you are approaching the final stages of selling your home, it is not time to relax just yet. While it may be a relief to no longer worry about constantly showing your home, you still have responsibilities towards the buyer, the buyer’s agent, and the contractual agreements.

As a seller, it is crucial to understand the essential aspects of the settlement process

What contingencies impact sellers before closing on a house

Although the primary responsibility for finalizing financing and acquiring homeowners insurance lies with the buyer, there are certain contract contingencies that may also affect you as the seller, particularly if you are currently residing in the home.

Prior to the closing of a house, it is common for most transactions to involve a home inspection. As the seller, you will be required to make your home accessible to the inspector and subsequently engage in negotiations with the buyers based on any findings from the inspection, as stipulated in the terms of your contract.

In addition to the standard home inspection, certain contracts and lenders may require a termite inspection and a radon gas inspection. In such cases, it will be necessary for either you as the seller, your listing agent, or the buyer’s agent to ensure that the home is made available for these specific inspections.

Prior to the closing of a house, another crucial step is the appraisal. If the appraisal value surpasses the agreed-upon sales price, buyers can take comfort in knowing they have acquired a home below its market worth. Once the contract is signed, the seller cannot negotiate for a higher price.

However, if the appraisal value falls short of the sales price, the buyer’s lender will limit the loan amount to the lower value. In such cases, the buyer may need to provide additional funds to bridge the financing gap or request renegotiation of the contract. Your agent can offer guidance on the best course of action, but it’s important to remember that both you as the seller and the buyer are bound by the terms of the contract.

Before proceeding to settlement, it is advisable to thoroughly review the contract with your agent and ensure that you are prepared to fulfill any obligations you have made. This includes determining which items will be conveyed to the buyer and addressing any repairs or improvements that you have committed to making.

Negotiating a settlement date

Buyers and sellers usually engage in negotiations to determine a settlement date that works well for both parties. If you have sold your home but are not yet prepared to move into your new residence, there is a possibility to negotiate a “rent-back” arrangement with the buyer. This allows you to remain in the home after the settlement by paying rent to the buyer.

Typically, lenders impose a maximum rent-back period of 60 days. If you require a longer duration, it is important to discuss this with your buyer and your agent.

Alternatively, some sellers may allow the buyers to occupy the property before the settlement takes place. In either scenario, it is crucial to establish a written agreement that outlines the responsibilities of each party in the event of any damage or loss to the house or its contents during the transition period.

Settlement services

The decision regarding the party responsible for providing settlement services, also known as closing or escrow services, can vary between different markets. In many locations, the buyer is the one who selects the settlement company, while in other places, it is the seller’s choice. During the closing process of a house, the buyer will provide the necessary funds to purchase your home, and the settlement agent will review the sales agreement to determine the payments you will receive. The title to the property is then transferred to the buyers, and arrangements are made to officially record this transfer of ownership with the appropriate local records office.

During a typical closing, adjustments are made to ensure the final amounts owed by the buyer and the seller are accurate. For instance, if you have been making property tax payments through an escrow account, you may receive additional credit for prepaid taxes. Conversely, if the property taxes have not been paid correctly, you may receive a reduced amount at settlement.

Once the necessary settlement documents are signed and the house keys are exchanged, you are officially liberated to transition to your next home.

Experts in Residential Real Estate in Orlando

If you are BUYING or SELLING real estate it’s quiet often the single most important financial decision you make. For the last 30 years we have helped clients buying and selling property in Orlando and the surrounding areas. Put simply, this means the knowledge and expertise accumulated over this time ensures our clients get the best representation possible.

Our experienced agents will help and guide you through the entire process providing valuable support every step of the way.

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