Buyers and sellers alike would prefer no closing cost, but borrowing, paying, and transferring money costs money. Buyers and sellers may need to prepay for certain services and repairs while waiting to close.
After signing a purchase agreement, the seller and buyer will each need to complete tasks before closing day. The buyer’s main task is to obtain funds to buy the home and pay other fees by closing. The buyer may also need to fulfill the lender’s requirements to obtain the loan.
As the buyer:
- You may want to set up a home inspection. Most lenders require a home inspection to look for major issues that could be costly later. Even if your lender does not require one, an inspection will give you a better idea of what you are buying and could help lower your purchase price or get buyer allowances.
- You may need to pay for inspections before closing.
- Be at the property on inspection day. The inspector can better point out and explain issues in person than a report can illustrate. Ask the inspector about estimates for repairs or take notes to research after.
- Contact the local utility companies about setting up a new account or transferring service. The seller may close their account on closing, and a lapse in coverage could cause costly damage, such as frozen pipes.
The lender may request additional documents, information, or clarity about your income and assets during the first week. Mortgages can be complicated if you have an unconventional income, such as self-employed, gig work, or an entrepreneur.
Just before closing, the lender will give you the final term disclosures, including closing costs. In some states, you will need to wait three days before you can sign and return it, and these waiting periods are to ensure you review the legally binding documents.
The day or two before closing, your real estate agent will walk you through the property another time. You should make sure everything is as agreed during this walk-through. Check that the seller held up their end of the agreement. This is your last chance to ask for changes.
As the seller:
- You are required to maintain the home as it was the purchase agreement date.
- You will also need to uphold any agreements you made in the contract. For example, the buyer may want the home professionally cleaned, repainted, or something fixed or replaced.
- You should notify utility companies of the sale date and when the new owner will be responsible for the electric, water, gas, sewer, or oil bills. You could be responsible for the utility expenses of the new owner if you do not close your accounts at the property.
Find out what to expect on closing day for buyers and sellers as well as real estate agents and closing officers.