Consumer advocates strongly recommend that buyers hire their own agents. They further argue that a coop-fee has already been built-in to the purchase price, and therefore, there is no need for the buyer or seller to incur additional fees when the cooperating agent represents the buyer.

 
Why would a Buyer Agent want to negotiate a lower price for the Buyers?  Won't that reduce your commission?

 
The way a Multiple Listing Realtor Co-Broke normally works is that on a 5% commission* (*used as an example rate only), 2.5% would go to the Listing Agency and 2.5% to the Buyer Agency on behalf of the Homebuyers. The commission is then split again 50/50 between Buyer Agency and the Buyer Agent.

 
Thus for every $1,000 that we reduce the sales price for you, your Buyer Agent's commission will only be reduced by $12.50. It is our job to make sure that you are an extremely happy, fully educated Real Estate consumer.

What Happens at Closing

The closing meeting is where ownership of the home is officially transferred from the seller to you. Your closing agent coordinates all of the document signing and the collection and disbursement of funds. Your main role at the closing is to review and sign the numerous documents related to the mortgage loan and to pay the closing costs.

Most of the people involved with the purchase of your new home will attend your loan closing. The closing is a formal meeting typically attended by the buyer(s) and the seller(s) (and their attorneys if they have them), both real estate sales professionals, a representative of the lender, and, of course, the closing agent.   The meeting takes about one hour and usually is held at the closing agent’s office.

The steps below explain what happens during and after the closing meeting:

1 - First, the closing agent reviews the settlement sheet with you and the seller and answers any questions. Both you and the seller sign the settlement sheet.

2 - The closing agent then asks you to sign the other loan documents, such as the mortgage note and Truth-in-Lending statement. Evidence of required insurance and inspections is also presented (if it wasn’t previously given to the lender).

3 - If everyone agrees that the papers are in order, you (and the seller) submit a certified or cashier’s check to cover the closing costs and the balance of funds due (if applicable). And, the check from the lender covering the mortgage amount is submitted to the closing agent.

4 - If the lender will be paying your annual property taxes and homeowner’s insurance for you, a new escrow account (or reserve) is established at this point.

5 - You receive the keys to your new home.

6 - After the meeting, the closing agent officially records the mortgage and deed at your local government clerk’s office or registry of deeds. This legal transfer of the property may take a few days after closing. The closing agent usually will not disburse the funds to everyone who is owed money from the sale (including the seller, real estate professionals, and the lender) until the transaction has been recorded. It is at the point of deed recordation that you become the official owner of the home.

Closing Activities Checklist

In the weeks before closing, you’ll need to make some important decisions. Your lender and your closing agent will be handling many pre-closing activities. But you still need to be aware of them and know who typically arranges and pays for each activity.

No later than three business days after your loan application was received, your lender should have delivered or mailed to you a “good faith estimate” of the total charges due at closing and a copy of the government publication Settlement Costs: A HUD Guide. Then, one business day before the closing meeting, your closing agent must allow you to review a copy of your two-page settlement form — called the HUD-1 Settlement Statement.

The good-faith-estimate is based on the lender’s typical loan origination costs for the area where your home is located. So the estimate usually changes between application and closing. That is why you’ll want to review your settlement form before the closing meeting. It will show you the actual amount of money you’ll need to bring to closing. Remember that you’ll need to pay your closing costs in the form of a certified or cashier’s check. Personal checks usually aren’t accepted.

Closing costs vary widely depending on price, location, and other factors. Overall, you can expect your closing costs to amount to between 3 percent and 6 percent of the sales price.

More on this topic in Part 3 of Closing on Your Home…

Our next several posts will discuss the various activities that must happen before you can close on a mortgage loan, and tells you what will happen at the closing meeting, including what types of documents you can expect to receive.

The mortgage loan closing (or settlement) is the meeting at which you take official ownership of the house. You’ll be required to sign many papers and pay your closing costs at the meeting in order to take possession of your new home. Technically, two separate closings occur at this time: the closing of your loan and the closing of the sale. Then, at the end of the meeting, you get the keys to your new home!

Although the closing process varies from state to state, and even within the same county or city, certain activities are standard. It is to your benefit to understand the many activities that need to occur before, during, and after the closing meeting and their costs.  Of course, as your Buyer's Agents, we will assist you every step of the way in the closing process!

More on this topic in our next post.  Why not subscribe to our blog using one of the convenient subscribe icons to the right of this post?

If you feel less than certain that you will be able to go through with the purchase for any reason, you can - and should - go one step further. Insist on adding an 'escape clause' to your offer. This allows you to back out of an agreement without incurring any penalty or disadvantage. This clause should be already in the 'Offer and Acceptance' form supplied by your attorney or buyer's broker. If it isn't, ask him how to add it.

Such a clause might state that you will go through with the deal, but only if certain other things happen. For example, you'll complete the purchase provided your partner or mortgage lender or attorney approves it. Remember, this offer document is not the full Sales and Purchase Agreement. That will be drawn up later by your attorney or broker (or approved by him) if your offer is accepted. And, it will spell out in detail the conditions attaching to the purchase.

The escape clause (often called a 'contingency' or 'contingency clause') in the Offer and Acceptance document serves only one purpose, to allow you the right to withdraw without any cost or further obligation to you. This is a matter you should cover in your preliminary talk with your attorney or buyer's broker. At the same time, seek advice on how to go about putting a deposit on the home you select. And keep in mind that an offer to purchase can be withdrawn at any time prior to acceptance, with or without an escape clause.