Buying a home is no small task – and neither is selling one. Before closing that deal, sellers must consider tasks including repairs, cleaning, staging, last-minute showings. Buyers have their own set of responsibilities to consider, from insurance to the final walkthrough. Want to avoid complications? Whether you’re buying or selling a home, follow the steps below to avoid closing day mishaps!
Repairs and Maintenance
After you accept the buyer’s offer, they will schedule a home inspection – typically within the first two weeks. During this inspection, the licensed inspector will note any concerns, from cracked tiles to roof damage. The buyers will review the inspector’s report and take one of three actions: continue with the contract as-is, cancel the contract, or ask to make repairs or concessions based on the report.
In most cases, buyers will return to the negotiating table and ask for repairs or concessions (a reduction in price or cash at closing for necessary repairs). The agent will review the buyers’ terms with the seller and decide whether to accept, deny, or counteroffer the requests. Should the seller accept the buyer’s terms, all repairs must be completed before closing day. Sellers should keep all receipts, warranty and other information regarding the repairs. You will need to prove that all repairs requested by the buyers are completed to their satisfaction.
About a week before closing, contact your utility providers and notify them of your move. However, make sure you leave all utilities on until the day after closing. If you cut off electricity, gas, and water before closing, the buyers won’t be able to check those systems during the final walkthrough. Keeping those utilities on protects the property, too. Imagine selling your home in the winter and mistakenly canceling utilities a few days before closing. Your buyers will show up to do the final walkthrough and may walk in to a flooded house! In this instance, they have every right to walk away from the deal, leaving you to clean up the mess. What’s more, you’ll have to start the selling process all over again. Bottom line: schedule your utility shut-off. But not until the day after closing.
You’ve probably amassed a mountain of paperwork for your home over the years. If you don’t already have all home-related documents together, start rounding them up as soon as possible. Make a neat stack and leave it in a cabinet or drawer for the new owners. Notable documents include:
- User manuals
- Warranty paperwork
- HOA documents
- Contact information for your favorite maintenance companies
Bring Necessary Funds
The sellers have a much easier job on the day of closing than the buyers. In some cases, you won’t need to bring any money to closing. All fees, including real estate agent commission, come directly from the sale of your home. However, some instances require sellers to bring funds to closing. If you are helping the buyers with their closing costs, you will need to bring a cashier’s check in the exact amount notated on your settlement statement. You should receive these details a few days before closing. You might also need to bring a cashier’s check or wire transfer notice if you have a remaining balance on your mortgage after the sale. While this is unlikely in today’s market, it’s worth noting.
On Closing Day
Before closing, make sure you’ve removed all your belongings and cleaned the home. What constitutes “clean” is often in the eye of the beholder. But at the very least, you should sweep and mop floors, vacuum carpets (steam clean if time allows), dust and wipe down surfaces and counters and clean the bathrooms.
Make sure you bring the following information to the closing table or leave for the new owners:
- All house keys
- Garage door openers
- Gate codes
- Information for smart home devices
Purchase Homeowners Insurance
Unless you purchase your home with cash, you will need insurance. Lenders require you to buy an insurance policy to protect the property in case of loss or damage. Typically, you will purchase a policy equal to the replacement cost of your home. You may also consider additional coverage that would replace the items inside your home. Most lenders will want proof of your insurance policy at least a week before closing. Not sure where to start? Check with your current auto insurance provider. Many insurance companies offer discounts for multiple policies. Your agent or lender may also be able to suggest insurance providers.
Sign Closing Disclosure
By now, you’ve worked with your lender to get your mortgage loan approved. About a week before closing day, you should connect with your mortgage lender and finalize the details, including locking in your interest rate. This is an important step; an increase in the interest rate will also increase your monthly payment for the life of the loan.
You will also receive a closing disclosure or CD. This is a finalized document from your lender, which they must provide to you at least three days before closing. The CD is several pages long and details the terms of your loan, including your exact monthly payment and your total closing costs needed on closing day.
If you have been in regular contact with your lender, there shouldn’t be any big surprises. Most lenders will provide you with an estimate, which usually matches the closing disclosure fairly closely.
The final walkthrough is your time to inspect the home for any last-minute problems. You will already have had a home inspection with a licensed inspector (usually done shortly after the sellers accepted your offer). If you asked the sellers to repair or replace anything in the home, this work should be completed by the final walkthrough. You can schedule a final walkthrough for the day of closing or one to two days in advance. Your realtor should work with the sellers’ agent to schedule a time that works best.
During this walkthrough, check that everything is functioning correctly and that all repairs have been completed. You can also check that the seller has removed their belongings and that the house is in good condition. If you have any concerns, it’s essential to address them immediately. Major issues like electrical, plumbing, or HVAC problems, inadequate repairs, or new damage, should be fixed by the seller before closing. In some cases, the sellers may offer cash at closing in lieu of fixing the damage. If you or your agent are not comfortable with this arrangement, closing should be delayed until a suitable solution is arranged.
Now that you have the closing disclosure, you’ll need to gather the necessary funds. Lenders may accept a cashier’s check or require a wire transfer to cover closing costs. This isn’t something you can do last-minute. Contact your financial institution as soon as you have final payment details to double-check funds and start a wire transfer if necessary. Then, check your funds again. Make absolutely certain you have enough in the bank to clear these necessary costs before beginning a wire transfer.
You will need several documents on closing day. Pro tip: gather them a day or two beforehand and have them ready to go. You will need:
- Photo ID
- A copy of your contract (your real estate agent should have this as well)
- The closing disclosure (your lender will have a copy, but it’s best to have it handy)
- Proof of homeowners insurance
- Proof of wire transfer OR your cashier’s check
- Checkbook for any other fees
Are you ready for closing day? Let us know if you have any questions or personal experiences to share in the comments below!