Home Sellers: What to Expect at Closing

The big day when a home sale closes: What will happen, logistically and legally.

By , Attorney · Loyola University Chicago School of Law

The closing is an important day for you as a home seller. You will transfer the property to the buyer and be paid for it, fully pay off any mortgages you took out and pay other closing costs and real estate agent commissions, and receive your sales proceeds. If using the proceeds for a new home purchase on the same day or shortly thereafter, it is particularly important that your closing runs smoothly. This article will help you figure out what to expect and how to avoid glitches.

What Is a Real Estate Closing?

Closing is when the house buyer and seller fulfill all of the agreements made in the sales contract. In more literal terms, it is about the transfer of money and documents so that you, the seller, can transfer ownership and possession of the property free and clear to the buyer. Also, you will pay off all loans that you are still carrying on the house and pay all of the parties who contributed documents or services to facilitate the sale and closing.

If you agreed to make any repairs to the property or take any other action to improve it, or to take action to clear title to the property (such as removing a shed encroaching onto a neighbor's property), all of these agreed-upon endeavors should be completed by the closing as well. The exception would be if you and the buyer made a separate contract for the work to be completed at a later date.

A closing is often called "settlement" because the seller, together with the buyer, the buyer's lender, the sales agents, and the seller's lender, are "settling up" among yourselves and all of the other parties who have provided services or documents to the transaction. To make this process secure and enable all of the parties involved to treat all of the closing tasks as having taken place simultaneously, you will most likely hire a disinterested third party, called a "settlement agent" or "escrowee."

The escrowee will take in all of the documents, money, and other items needed to close from the parties assigned to furnish them, pay out the money necessary to clear title, pay off all of the old lenders and lienholders, and pay the sales agents and other service providers.

Where Will Your Closing Happen?

Traditionally, your closing would have taken place in the office of the escrowee; typically the title insurance company that insures the buyer's title to the property. In some places, such as Alaska or Southern California, the lender's office commonly would handle the closing of escrow; or an attorney involved in the transaction might have hosted.

Due to both the coronavirus pandemic and the rise of digital possibilities for document transfer and signing, however, it's entirely possible you won't need to go to any office at all. The documents can all be sent to you via an online portal, where you select a handwriting style for your signature and approve or agree to the contents with a few clicks.

Some signatures will need to be notarized, however, which requires a notary public to actually view your driver's license, passport, or other proof of identity. Upon request, a mobile notary can come to you.

In some states, the seller will close through an escrow that occurs over a period of days or weeks. Other states have what are known as "table closing," in which the entire closing, including the deposit of documents, funds, and other items required to close, and the final disbursement of all the escrow deposits, occurs on a set date.

If the Closing Is Done at an In-Person Meeting, Should the Seller?

Unlike the buyer, who might have to attend the closing to sign original loan documents delivered by the lender to the closing, you, as the seller, might or might not need to attend. Instead, you could pre-sign the deed and other transfer documents, or even give your attorney a power of attorney (POA) to sign any incidental documents for the escrowee. Your sales proceeds can be wired directly to your bank or your new home purchase escrow if you are purchasing on the same day as, or shortly after, your sale.

Attorneys and escrowees differ on the issue of whether the seller should attend the closing. Some advantages of not attending are that you can use the time to attend to other important matters, such as completing your move. By not attending the closing, you might also avoid potentially tense conversations with a buyer who could be concerned about minor, immaterial defects and seek closing credits that are not required by the contract.

After the Closing

The closing is complete when the escrowee pays off your lender and other lien holders and service providers, pays your sale proceeds to you, places the deed (and the buyer's mortgage if any) for recording with the county recorder of deeds, and gives all other transfer documents to the buyer.

After a completed closing, you are no longer the owner of the property. Unless the contract or another side agreement states otherwise, you must relinquish possession of the home by giving the buyer all keys, garage door openers, and other devices that control the home's systems and appliances.

You are expected to have completely moved your household and your possessions out by this time as well, and left the place broom-clean, at a minimum. Absent an agreement with the buyer that allows you to stay longer, you can be evicted, or the buyer may sue you for damages caused by your breach of the sales contract.

If you believe you might not be able to move out on or before the closing date, you should negotiate a post-closing possession agreement with the buyer, sometimes called a "rent-back." Ask the buyer for this as soon as possible, either at the time you negotiate the sales contract or well before the closing. The agreement should allow you to stay in the home for a specific amount of time in exchange for daily or monthly rent, depending on the length of time you will remain in the home. (In a hot market, however, an eager buyer might allow you to live in the house for a month or more rent-free.) The rent should cover the value of your possession of the property (you are now a tenant in what was once your own home), hazard insurance, and real property taxes for the time you remain there. You will be responsible for any damage to the home that occurs during this time.

Shortly after receiving full payment of your outstanding mortgage loan, your lender should prepare and deliver a release of mortgage to you. Sometimes, the lender will send the original release to the escrowee or directly to the county recorder of deeds for recording, but it is important that you make sure the release is recorded and returned to you.

Keep this release and copies of all of the other closing documents. Your tax preparer might want to see one or more of these closing documents when preparing your taxes for the year of the sale. For more information, see the "Selling a House" section of Nolo's website.

Talk to a Lawyer

Need a lawyer? Start here.

How it Works

  1. Briefly tell us about your case
  2. Provide your contact information
  3. Choose attorneys to contact you
Get Professional Help

Talk to a Real Estate attorney.

How It Works

  1. Briefly tell us about your case
  2. Provide your contact information
  3. Choose attorneys to contact you