WHAT TO EXPECT AT THE CLOSING

 

The closing on the purchase of real estate can take place in the office of the realtor, the office of the attorney for the buyer or seller or at the financial institution.  The closing is generally attended by the buyer, the seller, the brokers and the closing agent.  If the buyer is borrowing money for the purchase, a representative of the lender may also attend.  A real estate attorney can help to advise you through this process.

 

The closing costs incurred when a buyer borrows money from a financial institution can at times be very significant.  A buyer should be certain that all of the expenses of the transaction are disclosed prior to signing the final purchase agreement for the real estate.  A buyer should insure that they are informed of exactly what all of the expenses will be rather than a general statement that closing costs will be incurred.

 

The expenses normally incurred by a real estate seller include:

• Initial continuation of the abstract.

• The expense to prepare the deed and other documents to be delivered to the seller at the closing. 

• The transfer tax on the sale (the transfer tax is basically $1.60 per $1,000 of the purchase price).

• Real estate taxes.  Iowa real estate taxes are paid on a fiscal year.  This year begins July 1st and end on June 30th of the following year.  Property taxes are paid a year after the owner is actually in possession of the property.  Therefore, if real estate is sold on July 1st of a given year, the sellers normally pay all of the real estate taxes payable in the fall of that year and the spring of the following year.  The real estate taxes will also be then prorated to the date of possession.  The realtors or attorneys involved in the transaction can explain this matter more fully.

 

The purchasers of property normally incur the following expenses:

• A fee from the attorney to examine the abstract and prepare the title opinion. 

• Loan origination fees required by a lender.

• The fee for the appraisal, if done.

• The fee for the inspection, if done.

• The fee to record both the deed received from the seller and the mortgage they give to the lender. 

• Other document preparation fees charged by the lender.

 

At the closing, the buyer and seller provide all documents required by their agreement.  The buyer normally signs any mortgage prior to the closing so that the lender will make funds available for the purchase of the real estate.  At the closing the buyer should receive a copy of the closing statement showing all expense, the original deed, truth in lending statements, groundwater hazard statements, transfer tax check, a check for the prorated real estate taxes, the keys to the property and all the documents required under the title opinion to give the buyer marketable title.

 

At the closing the seller receives a check for the net proceeds of the sale as disclosed on the closing statement.