Sell My House Closing Process and Legal Documents 1 — Questions and Answers
Question 1: What is 'closing' in a real estate transaction?
- When the seller accepts an offer
- The final step where ownership legally transfers from seller to buyer and all funds are exchanged (Correct answer)
- When the listing agreement expires
- When the home passes its final inspection
Correct answer: The final step where ownership legally transfers from seller to buyer and all funds are exchanged
Closing is the legal completion of the sale where the buyer pays for the home, the seller receives proceeds, and the deed is transferred, officially making the buyer the new owner.
Question 2: What is a 'closing disclosure' (CD)?
- A document the seller fills out listing all known defects
- A federally required document detailing all final loan terms, fees, and cash amounts due at closing (Correct answer)
- A report from the title company on property history
- The deed transferring ownership to the buyer
Correct answer: A federally required document detailing all final loan terms, fees, and cash amounts due at closing
The Closing Disclosure is a five-page CFPB-mandated document that lenders must provide to borrowers at least three business days before closing, detailing every cost and financial element of the loan.
Question 3: What is 'title insurance' and why is it important for home sellers?
- Insurance the seller buys to cover moving costs
- Insurance that protects against losses from defects in the property's title history, such as liens or ownership disputes (Correct answer)
- An insurance policy that covers the home's structure
- Insurance required by the HOA
Correct answer: Insurance that protects against losses from defects in the property's title history, such as liens or ownership disputes
Title insurance protects buyers and lenders from financial loss due to title defects — liens, back taxes, or competing ownership claims — that may surface after the sale closes.
Question 4: What are 'closing costs' that a seller typically pays?
- Only the real estate commission
- Agent commissions, title fees, transfer taxes, prorated property taxes, and any agreed seller concessions (Correct answer)
- Only the mortgage payoff balance
- A flat government fee of 1% of the sale price
Correct answer: Agent commissions, title fees, transfer taxes, prorated property taxes, and any agreed seller concessions
Seller closing costs typically include real estate commissions, title and escrow fees, transfer taxes, prorated property taxes, and any credits or concessions agreed to in the contract.
Question 5: What is a 'purchase and sale agreement' (PSA)?
- The seller's listing agreement with their agent
- The legally binding contract between buyer and seller outlining all terms of the transaction (Correct answer)
- The document the lender uses to approve the buyer's mortgage
- The title company's fee schedule
Correct answer: The legally binding contract between buyer and seller outlining all terms of the transaction
The Purchase and Sale Agreement is the primary contract in a real estate transaction, specifying the price, contingencies, closing date, and all other agreed-upon terms.
Question 6: What does it mean for a sale to be 'contingent'?
- The home is sold without any conditions
- The sale is dependent on specific conditions being met, such as financing, inspection, or appraisal (Correct answer)
- The property is in pre-foreclosure
- The closing date has passed without completion
Correct answer: The sale is dependent on specific conditions being met, such as financing, inspection, or appraisal
A contingent sale means the transaction will only proceed if certain conditions — like the buyer securing financing or the home appraising at value — are successfully fulfilled.
Sell My House Closing Process and Legal Documents 1
What is 'closing' in a real estate transaction?