Settlement, also known as closing, is the final step in a real estate transaction. It’s a big day for both buyers and sellers!
At closing, property ownership is officially and legally transferred from the seller to the buyer. In the past, both the buyer and seller always attended closing together. These days, we see joint settlements about 50% of the time. The other half of the time, the sellers sign their paperwork either remotely (if they are out of town sellers) or a few days in advance. Buyers are required to be there the day of settlement.
Settlement is also when money changes hands. Buyers must either bring certified funds for what they owe (their downpayment and closing costs) or wire the funds to the title company prior to closing. In some areas, sellers walk away with their proceeds they earned from settlement. But in most areas, the sellers will receive a wire or a check one or two business days after closing (once the deed has been recorded). If sellers are selling for less than they owe on the property, they also would bring a check or wire funds for that amount.
Be prepared to sign lots of documents!
Both parties will review the closing disclosure which is an accounting of the entire transaction and shows a full summary of money changing hands. You will need to review and sign the the note and the deed and complete administrative forms for the title company. At this time, typically the keys are exchanged and sellers are free to go. Before they leave, be sure to exchange contact info in case you need to ask them any questions.
After the sellers leave, buyers will also review things like the survey for the property (if you have ordered one) and all of the loan documents (unless it is a cash transaction). This step is the most time consuming part of the closing. Then the buyers are free to leave.
The settlement process usually takes about one hour. If you have kids, we recommend getting a sitter. You’ll want to minimize distractions during this hour as you are signing very important documents!
The title company will record the deed in the land records at the courthouse by the afternoon of settlement, or sometimes, on the following day.
You can read more about preparing for settlement day here. If you have any questions about settlement, please reach out. We are always happy to talk you through what happens at each step of in the real estate process.