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chapter 15

closing the real estate transaction

QuestionAnswer
accrued items unpaid items to be prorated such as unpaid current real estate taxes or interest on an assumed mortgage that are owed by the seller but will be paid later by the buyer.
closing the consummation of the real estate transaction; the point at which ownership of a property is transferred in exchange for the selling price; also called settlement
closing agent the one who usually conducts the proceedings at a closing and calculates the division of income and expenses between the parties.
closing statement A detailed cash accounting of a real estate transaction showing all cash received, all charges and credits made, and all cash paid out in the transaction.
Credit on a closing statement, amount entered in a person's favor – an amount the party has paid order amount received from another party.
Debit on a closing statement, an amount charged; and amount the party must pay a settlement.
prepaid items expenses that have already been paid by the seller prior to closing and the buyer needs to rebate that portion to the seller; generally real estate taxes or HOA dues.
prorations divisions of financial responsibility between the buyer and seller for such items as loan interest, taxes, rents, and fuel or utility bills.
Real Estate Settlement Procedures Act (RESPA) federal law that ensures that residential buyers and sellers receive full disclosure of all settlement charges; mandates HUD booklet about closing costs, a good-faith estimate of closing costs, and hUD-1 closing statement.
Settlement The process of adjusting and prorating credits, debits, and closing expenses to conclude a real estate transaction; referred to as closing.
Settlement statement (hud – 1) Three-page document used in most residential closings detailing all cash due (or from) the buyer and seller.
soil suitability test a test that measures the soil's ability to absorb and drain water; usually paid for by the buyer.
survey gives the purchaser information about the exact location and size of the property
walk-through the final inspection of the property by the buyer prior to closing to assure that the seller has vacated, made required repairs, and delivered the property in the condition it was in at contact.
Created by: whitwill