The Walk-Through Inspection

The purpose of the walk-through inspection – just prior to settlement - is to determine if all of the conditions in the contract have been satisfied. The time for the buyer to inspect and note defects for correction by the seller is during the contract negotiation and prior to signing the sales agreement (i.e., not during the walk-through inspection).  By this point, all repairs, modifications, or replacement items should have been duly noted in the contract.  Most resale homes are sold in “as is” condition; however, basic mechanical, electrical, and plumbing systems are generally expected to be in normal working condition.

It is up to the buyer to perform this inspection, not the seller, who may or may not be present. The buyer is often accompanied by the buyer’s agent (when there is one).  The home seller should make certain that utilities are “turned on,” so that equipment can be operated and properly inspected.

Room by Room Poking and Prodding

Expect the buyer to thoroughly examine every detail of the home:  he/she will usually try all lights and switches; turn all faucets on and off, run showers and flush toilets; turn on the furnace and central air conditioning; test all stove burners, as well as the oven; test the dishwasher, washer, and dryer; open and close all windows and doors.  In short, the buyer should try, test and examine everything, including the locks on the doors, the garage opener and the fireplace.

All deficiencies should be noted. If the seller does not correct any identified problems (that he had agreed to remedy during the contract negotiations) prior to final settlement, then appropriate funds may be withheld by the settlement attorney for repairs.  The seller should of course strive to make any necessary repairs prior to settlement.  Upon receipt of bills and notification that the necessary repairs have been completed, the attorney will release the balance of funds to the seller, if money has been escrowed for such needed repairs.

Signing the Papers and Transferring the Keys

Signing off on all the paperwork, and the transference of the keys to the property, is the culmination of any real-estate sale.   Present at the settlement will be an attorney or title company representative, the buyer, any brokers/agents involved, and all of the owners.   The home seller should bring all warranties on equipment (or leave them in the house), as well as any instructions on equipment, maintenance, and operation. 

The attorney will have searched the title, and will have obtained old and new lender instructions.  First, any unresolved walk-through deficiencies are resolved.

The attorney explains to the buyer the key documentation involved, such as the deed of trust, deed of trust note, and settlement sheets.  The buyer signs all three, and pays the balance of the down payment, as well as the buyer’s closing costs (also known as settlement costs).

The attorney explains to the seller the deed and settlement sheets, and obtains the home seller’s signature on them. The seller then pays all closing costs that correspond to the selling side of the transaction.

 Seller’s Settlement Costs

Closing costs for the seller can vary, but may typically include:

• Attorney’s fees 
  (preparation of the deed, settlement fee, and any release fees)

• Lender’s inspection fee

• Appraisal

• Brokers’ commissions 
  (i.e., 3% to the listing agent, and 3% to the buyer’s agent, or sub-agent – unless, of course, you are using MLSNow’s commission-busting listing service!)

• State deed transfer tax or recordation fee

• Condominium or homeowners association packet fees

• Mortgage pay-off penalty

• Interest up to the date trusts are paid off

• Water escrow (amount pro-rated at settlement)

• Termite inspection

If the seller’s taxes or insurance have been escrowed, the seller will receive any money that has accumulated in the account for bills not yet due.  Additionally, the seller will be reimbursed for any money paid in advance and not used, such as property taxes.  The seller will receive these refunds at or immediately after the time of settlement.  Taxes and homeowners association dues or condominium fees will be prorated on a daily basis. The seller, buyer, and any associated brokers are supplied a copy of the settlement sheets for their records.  The house keys are then transferred to the new owners. It’s now time to break out the Champagne! 

Disbursement

The attorney or title company will disburse funds after all funds are in hand, all checks have cleared, the new lender has reviewed the papers, and the title has been re-checked and the deed recorded. The seller should not expect to receive funds for up to four days – although they may be disbursed the very same day in some localities.  The house has now been sold, settled, and all funds disbursed.