After signing a buyer’s purchase contract to sell your house, the preparation for settlement begins. Settlement, or closing escrow, is the process of transferring the title (ownership) of the home from seller to buyer.

A lot of times, the real estate agents will help take care of these arrangements. But the buyer and seller are ultimately responsible for managing to these details.

Buyer’s Responsibilities

Buyer gets a loan.
The buyer must first secure the financing to buy the house. Usually this means taking out a mortgage loan. Most lenders require a complete financial report, including income and expenses, and credit check. In addition, most want an up-to-date appraisal of the home, a survey of the property, and any required inspections. Some lenders specify which service providers they want the borrower to use. Once all the paperwork is complete and submitted, the borrower should keep in touch with the lender until receiving commitment.

Obtain homeowner’s insurance.
Prior to buying, a hazard insurance policy should be purchase. The buyer is also required to purchase title insurance policy to protect the lender. If the buyer is interested in bringing an attorney to settlement, arrangements should be made 30 to 60 days in advance.

Receive Good Faith Estimate.
The buyer should receive a Good Faith Estimate of settlement costs a few days before settlement. Along with the loan commitment letter, the buyer must bring a certified or cashier’s check for the down payment and any other costs due at settlement. Mortgage interest from the closing date to the first payment due, escrow for property taxes and insurance, and various taxes and recording fees are included in these cost.

Seller’s Responsibilities

Select closing agent.
Usually, it is the seller that designates the settlement agent. This should be done 30 to 60 days before closing. The seller and listing agent work together to arrange inspections and appraisals and to provide needed paperwork such as previous title insurance information and any prior inspections.

Give loan payoff notice.
The sellers would need to check with their lender to get the current figures for the payoff of the mortgage, and to learn if any rebates are due for pre-paid taxes or insurance.

Joint Responsibilities

Stay on top of details.
Both the buyer and seller need to give the settlement agent any and all relevant information. Many long and detailed forms are usually signed at settlement, so requesting copies of the basic settlement forms in advance to review ahead of time should be considered. At the settlement table, the focus is on checking the exact figures to be sure they are accurate.

Designate legal representative.
In case the buyers or sellers cannot come to closing, they should notify the settlement agent in advance so a Power of Attorney form can be prepared. The person named on the form can act as the signer’s legal representative.

Once all the papers are signed and money paid, the keys are handed over to the buyer and the sale is complete.