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What is a Closing Date?

The closing date is the final step in the sale of property.
Before the closing date is set, a seller may check into a buyer's credit history.
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  • Written By: Malcolm Tatum
  • Edited By: Bronwyn Harris
  • Last Modified Date: 25 July 2014
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The closing date is the designated date that a sale of property is understood to be final. Closing dates will involve several components that must be addressed and completed in order for the process to be considered final. Sometimes referred to as a completion date, the closing date is significant for both the buyer and the seller. In the event that a realtor is involved in the transaction, the closing date is also an important invent for the real estate professional.

Closing dates mark the point in the transaction process when all important functions associated with the exchange of property are to be completed. This will mean different things to each party involved in the transaction. As such, each party will have specific action items to address in order to ensure the closing date is not postponed for some reason.

In the event of the buyer, there are two important action items to address before he or she is ready for the closing date. First, the buyer will have either secured financing to purchase the property or have cash on hand to secure the purchase. When the buyer is making a cash purchase, it is not unusual for the buyer to use a financial instrument such as a certified check. Second, the buyer will have completed all paperwork necessary to allow the purchase to proceed.

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For the seller, the closing date is also significant. Before the closing date can be set, the seller must first accept the offer to purchase that is extended by the buyer. This will sometimes involve investigating the credit history of the buyer, if the seller intends to finance the purchase personally. The seller will also be responsible for presenting legal proof that the property in question has a clear title and that the seller has the authority to enter into a contract to sell the property.

When a real estate professional is involved in the transaction, the realtor will often coordinate the efforts of both the buyer and the seller. To that end, the realtor will work to negotiate a deal that is agreeable to both parties, assist the buyer in verifying the method of financing, make sure the property meets local requirements regarding the sale of property, and prepare the legal documents to complete the sale. The realtor also usually oversees the process of preparing the deed and makes sure that deed delivery to the new owner takes place in a timely manner.

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Discuss this Article

SauteePan
Post 8

@Sneakers41 - I am glad that you were able to get your condo, but for me that sounds a little risky. I just wanted to say that if I can’t close on a property because the bank will not finance it because they consider it a risky investment than I am walking away from the property and looking for something else.

I know that many people get great deals on cash sales like this, but to me I take it as a sign if the bank is not willing to finance the property.

sneakers41
Post 7

@Latte31 - That is a really good idea. I also wanted to add that there could be a mortgage closing date delay if the buyer cannot secure traditional financing because the property does not meet other lending standards.

For example, although we were preapproved for a mortgage loan with the bank they refused to finance a beachfront condo that I was looking to buy because it did not have at least 50% owner occupancy and it also had a foreclosure rate of 21% which was considered too high for the bank.

So I had to take out the equity of another property and with this home equity line I was able to buy this property and have a cash closing.

I did not have to pay any charges at closing because I was using an equity line to buy the property and not a traditional mortgage. On properties like this where the financing is limited you either have to have the cash on hand or the equity on a property in order to close on the property.

latte31
Post 6

@Sunshine31 - I agree with you. Another problem that causes the need for a closing date extension involves substantial repairs to the home. If a home has structural and foundation issues a bank may not offer a loan on the property although the buyers may be preapproved.

So I think that before you put your home on the market it is smart to do your own home inspection to make sure that the faults that your property may have may be small enough to be repaired quickly and may not impact the sale of your home.

It is even advisable to get these repairs done before you put your home on the market so that your home will be move in ready for the buyers and there will be no problems with the mortgage closing date.

sunshine31
Post 5

@Letshearit -I just wanted to add that you want to make sure that the buyer is preapproved for the mortgage before you accept an offer because the approval process can take time and may cause a closing date delay. I saw this happen with a couple who got their offer accepted and had to scramble at the last minute to get financing which was denied by several banks because they did not have the 20% down payment and had to end up borrowing money from their parents in order to make the closing date.

Also, if your home is not properly priced and does not appraise at the accepted selling price than as a seller you will either have to lower your price or find a cash buyer because banks will not finance a property that is higher than the appraised valued.

This is becoming more of a problem because the high amount of foreclosures on the market are making it more difficult to pinpoint the accurate market value of a home.

Many homes on the market are overpriced and that is something to keep in mind. A good realtor should be able to give you the comparative analysis of similar homes on the market to get the right starting price for you so that you can sell your home on time and not need a closing date extension.

letshearit
Post 4

Be very careful of the stipulations in the contract when it comes time to choose a closing date. If there are any issues with the home, you need to set timelines as to when things will be fixed and who is footing the bills. If these requirements are not met, the buyer can legally walk away from the transaction if it is in the contract to have them taken care of.

In the case of something like a new roof needing to be put on, or replacing some of the piping, you should make sure this is done before moving in, or get a discount on the price of the house to cover these kinds of problems.

A home inspection is vital when buying, and your closing date can be a great way to set up a time to make sure all the work is completed.

MrSmirnov
Post 3

If you and the seller of a home have decided on the price of you home setting a closing date is a huge part of making sure everyone is on the same page with the transaction. There are a lot of considerations to be made when choosing a closing date. It can be reliant on home inspections, mortgage approval, or numerous other legalities.

Also, it is a good idea if the buyer includes a window of opportunity for the homeowner to move. Sometimes a closing date may be reliant on the homeowner finding a new place to live. Usually 30 to 90 days is a fairly standard length of time in this situation.

robbie21
Post 2

@SailorJerry - I think it's more typical for the buyer to move in the day after closing. It is quite common for the sellers to move out the same day of closing and you don't want to have two trucks going at once! I think a lot of times, the sellers give the buyers one key at closing and then leave the other behind after they're done packing up.

On the other hand, I don't think there are any hard and fast rules; it's for you to work out with the sellers. If they have already moved, then of course you can move in the same day. But remember that the closing date for a mortgage isn't set in stone--be prepared for possible delays!

Or the other way; I once sold a house that I had already moved out of and was sending papers from out of town. The realtor forgot to tell me that the buyer's financing came through early and he had moved up the date! I had to rush to send the papers.

SailorJerry
Post 1

I'm buying my first house and I'm not sure what the etiquette is, Can I expect to move in on the closing date on the house? We're all meeting at a lawyer's office to sign paperwork and I'm wondering if we can plan to move in that same day after closing. It'll be our house then, right? I assume we'll get the keys at closing.

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