For a home seller, the closing process is the completion of all of the agreements made between seller and homebuyer, as defined in the sales contract. On a typical closing day, a home seller transfers ownership of the property to the homebuyer, completes their mortgage payoff (as well as payoffs on any other home loans), pays all of the parties who provided services to assist with the sale, and collects any money they may have made from the sale.
3 Steps in the Closing Process for Home Sellers
In simplest terms, to complete the change of ownership of a home, the seller will take part in the transfer of these three important steps in order to close the transaction:
- Money
- Documents
- Property
Breaking down these three transfers a bit more, sellers can typically expect that some or all of the action items listed below may be included in the closing of a home sale:
Money. The transfer of money may or will include payoffs to:
- Seller’s mortgage holder as well as any additional lien holders
- Local government, if any property taxes are due
- Third-party service providers
- Real estate agents, for payment of commission
- Sellers, if any proceeds from the home sale
Documents. The transfer of documents may or will include:
- Deed to house
- Certificate of Title, Bill of Sale, and other real estate-related documents
- Signed closing instructions and/or settlement statement (HUD 1)
- Receipts (if needed) for completed repairs, per sales contract
Property. The transfer of property may or will include:
- Recording of the signed deed (completed by third-party) at county courthouse
- Post-closing agreement, if seller will need to rent back home for specified time frame*
- Exchange of keys, garage door opener, security codes and/or devices, appliance manuals, and so on
Note: Homeownership legally transfers to the new owner when the signed deed is recorded at the seller's local county courthouse.
What About the Buyer?
Wondering what a homebuyer can expect in the closing process? Take a look at this basic guide to a close from a buyer's perspective.
*A rent-back agreement may include a rental payment to the new buyer. It’s a good idea for the home seller to maintain insurance during the rent-back period because the seller becomes a ‘renter’ during this time frame and can be held responsible if any damage should occur.
