We have gone over the Purchase Contract in Part 1 and Inspection and Negotiation of Repairs in Part 2, and now we are in the final stage of the sale, the closing.
Once the inspections have been completed and all repairs have been agreed to, the buyer’s lender will order the appraisal. This is the last step, which could affect the sale if the appraised value does not meet the purchase price.
Repairs
If the seller has agreed to do any repairs, per the terms on the purchase contract, those repairs need to be completed at least three days prior to close. However, I recommend seven days prior to close since the new TRID has been implemented.
TRID (an acronym for TILA-RESPA Integrated Disclosure) came into effect in October 2015. There are two new disclosures, which come from the Know Before You Owe initiative to streamline the disclosures, which previously were used to help make the lending and closing documents easier to read and understand for the consumer. (For more information on TRID and these documents, please visit my website under the Blog tab.) These new disclosures have changed the closing process.
Walkthrough
With the new disclosures and regulations implemented with TRID, buyers may choose to do two walkthroughs if the seller has agreed to make repairs. Instead of the buyer doing one final walkthrough a day or two before closing, it is now advisable for the buyer to do a walkthrough earlier to check the repairs and a second walkthrough right before closing.
If a repair has not been completed, or has not been done correctly, this still gives the seller enough time to complete the repair. If a repair has not been done, and the parties agree to a cash settlement in lieu of the repair, there needs to be an addendum to the purchase contract showing it as a seller’s contribution to the buyer and it has to be added to the closing disclosure.
The new closing disclosure has to be sent to the buyer no later than three days prior to close. So, any changes need to be made prior to this deadline. If changes are made after the closing disclosure has been sent, it will need to be revised and potentially can hold up the closing. Having the first walkthrough done early can prevent any issues or delays.
The second walkthrough will be done once the sellers have vacated the property, which is usually the day before or even the morning of the closing. This walkthrough is done to check the condition in which the home has been left and to ensure any items included in the purchase are still there. I have had situations where the contract included the refrigerator or the washer and dryer, but when the final walkthrough was done, these items were not there.
You will want to address any issues arising from the final walkthrough and get them resolved prior to closing on the home. Even if all parties have signed the closing documents, the buyer still can stop the closing at the last minute if there are issues needing to be resolved.
Closing Disclosure
The new TRID closing disclosure replaces the old Housing and Urban Development, or HUD. With these new regulations, the buyer must receive and review the closing disclosure three days prior to close. If the closing disclosure is not received three days prior or has to be revised, the closing will be delayed.
Signing with Title
The title company will schedule a time for the seller and buyer to sign. The seller can sign earlier if he chooses, but loan documents have to be at title before the buyer can sign. Loan documents are typically sent a day or two before the close of escrow date.
Closing
Unlike some other states, the closing does not occur when all the documents have been signed. In Arizona, the buyer and seller can sign as soon as all the documents are ready. However, the actual closing does not occur until it has been recorded with the county. When all parties have signed, the lender will fund the loan, wiring the funds to the title company. As soon as the funds are received, the title company will release the documents to the courthouse to record. Once it has recorded, the sale is complete.
Lorraine Ryall has been a Multi-Million Dollar producer for the past seven years. You can reach Lorraine at (602) 571-6799. You also can send her an email at Lorraine@Homes2SellAZ.com, or visit her website at www.Homes2SellAZ.com.