CLOSING COST
Depending on where you live, different individuals may handle the closing process. It could be an escrow officer, the title company or a real estate attorney.
Closing processes can vary widely even within the same state. In Southern California the escrow instructions are usually part of the residential purchase agreement (RPA-CA) and handled on the front end.
Before any escrow can close, all the terms of the purchase contract must be met. Once all terms have been executed by both parties, then the buyer deposits the funds and the seller deposits the deed. In the state of California, an escrow is considered “closed” on the date that the grant deed is transferred from the seller to the buyer and recorded at the County Hall of Records. There is no closing table, and no settlement room like some other states.
When the title insurance company receives confirmation of recording from their representative at the County Hall of Records, the title company will wire transfer all funds they are holding from the buyers lender to the escrow company. At that point, the escrow officer will begin the process of balancing the transaction and disbursing funds to payoff the seller’s existing mortgages, liens and any other payments (i.e., termite company) that the officer has been instructed to pay through escrow.
The buyer becomes the legal owner of the property the day the grant deed is recorded.
CLOSING COST ESTIMATE
Some real estate agents use 1% of the expected selling price to estimate a seller's closing cost. This might be close to accurate in some cases. But, there are many variables that can affect the closing costs. Therefore, have your real estate agent give you an itemized list of estimated costs that you may pay.
Sellers' closing costs can include such things as the real estate broker's fee, transfer taxes, title insurance, attorney fees, closing or escrow agent fees, inspection fees, a home warranty, notarizing and couriering documents; recording fees; property taxes and homeowner association dues, if applicable.
In addition to the closing costs listed above, the sellers pay off the liens secured against the property and any outstanding interest owed at closing. When you make a mortgage payment, it pays interest owed for the previous month. So, you would owe the lender interest through the date the lender receives the funds.
With short sales, where the sale price is insufficient to pay off the liens and closing costs, additional closing costs may apply, such as a short-sale process fee charged by the escrow or closing agent. If a third-party short-sale negotiation company is involved, there could be a fee as high as 1 percent of the sale price charged at closing.