What Happens During a Real Estate Closing?

Did you ever wonder what happens at closing in a real estate deal?  Many think of it as a time where a bunch of documents are signed.  What does the signing of the documents actually accomplish?

Officially, a closing is the culmination of the entire real estate transaction and here is what happens:

  • Documents that tranfer the ownerhsip of the property from one party to another (conveyance) and other required instruments are signed and delivered
  • A monetary accounting is conducted between the parties based upon the Real Estate Settlement and Procedures Act (RESPA)
  • Parties determine if condition of title is acceptable
  • Funds are deposited with title company
  • Money, in the form of checks is given to the Seller, Listing Agent, Selling Agent and on occasion the buyer, the buyer/seller attorney (referrred to as disbursements) per the HUD-1 by the Title company (escrowee) as directed by parties
  • Ownership of the property is transferred
  • After closing, the documents of conveyance are sent to the county recorder’s office for recording by the Title company

Below is a chart that shows the common costs in a real estate transaction along with who is typically responsible for paying them.  The chart was provided by First American Title

Closing cost chart

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