Frequently Asked Questions About The Closing Process
What do I need to bring to closing?
Always ask the specific title company what they would like you to bring. Often times all that is needed is a legal form of identification such as a driver’s license.
Who picks the title company?
Some purchase contracts will say which side (buyer or seller) picks the title company. Some purchase contracts do not specifically say. As a Buyer is you don’t have a preference often your lender will choose the title company for you. As a Seller sometimes you can order preliminary title work. This is when a title company starts on the title search before you have a signed purchase contract. Sellers sometimes want this done to know about any issues before they have found a buyer.
What is a title company? What is a title search? What is title insurance? What does escrow mean?
Please see the following website: https://valmerland.com/title-services/what-is-title-insurance/
What is an inspection period?
This is typically a set amount of time that a buyer has to perform inspections of the property to determine if there are any issues or if they would like to proceed with the closing.
What is an appraisal and why does my lender require one?
An appraisal is something that your lender will require in order to make the loan. They will pick an independent appraiser to determine the fair market value of the property you are trying to buy. The appraiser will find comparable or like-kind properties that have sold and based on a wide array of factors will determine value based on what other people have paid for similar properties. An appraisal is something that the buyer typically pays for, either before closing or at the closing table. Real Estate is only worth what the public is willing to pay for it.
What are seller credits or seller concessions?
A buyer may ask for seller credits in a purchase contract. Seller credits are typically a monetary amount that a buyer may ask for to help with their closing costs. For example, say a property is listed at $95,000, a buyer may offer $100,000 with a $5,000 seller credit. The Buyer is still paying the Seller list price for the property but that $5,000 that is taken out of the Sellers proceeds will go a long way in helping the buyers total out of pocket cost to close on a property. The buyer may not offer a full list price and still ask for a seller credit back. As a seller it’s important to calculate your net proceeds after the seller credit.
What are closing costs and who pays for them?
On the Buying side, there are fees charged by the title company (title costs) These generally include but are not limited to, a title insurance policy fee, title search fee, closing fee, and document prep fee. If you are obtaining financing there are several fees charged by your lender (lending costs). For a complete list of fees and what they are, contact your lender. These fees will vary from lender to lender.
On the Selling side there are fees charged by the title company (title costs). These generally include but are not limited to, a title insurance policy fee, title search fee, closing fee, and document prep fee. There are also fees charged by your realtor (the commission). There are also taxes you have to pay as a seller. You will pay a county conveyance fee, this varies from county to county. You will also pro-rate the current real estate taxes to the buyer up to the day of sale.
The purchase contract you signed or will sign determines who pays for what in closing costs. Who picks up the costs vary from region to region throughout the state. In Columbus for example it is common for the Seller to pay for all of the title insurance policy, even though this is a document that ensures the Buyers interest. Rarely, a Seller will ever pay for any of your lending costs.
*ALWAYS CONSULT LEGAL COUNCIL FOR SPECIFIC QUESTIONS IN THE CLOSING PROCESS OR INTERPRETATION OF TITLE WORK DOCUMENTS. THIS FAQ intends TO PROVIDE A BROAD OVERVIEW OF THE COMMON QUESTIONS ASKED, IT IS NOT TO PROVIDE LEGAL ADVICE*