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A Guide to What Actually Happens at a Real Estate Closing

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Curbed University delivers insider tips and non-boring advice on how to buy, sell, or rent a home or apartment. Additional questions welcomed to tips@curbed.com. Up now: what happens at a closing.

Ahh, the closing. You’ve found your dream home, put together your board package, passed a board interview, and now your conscience is steady. Right? Once you get to the closing, everything should be fine and dandy, but of course, there are always obstacles. Before the closing, your agent should accompany you on the “final walk-through” (even though they technically don’t have to) so they can make sure everything seems to be in order, and that there are so gaping holes in the apartment, either literally or figuratively.

At a closing, the basic idea is: the buyer gives the seller their money. The seller gives the buyer the deed (for condos) or the proprietary lease (for co-ops). In short, everyone is moving on with their lives. Two closings may be taking place: the closing of the sale, and perhaps the closing of the buyer’s loan for the mortgage.

The closing can take place at a bunch of exciting locations?the office of the managing agent, one of the attorney’s offices, one of the broker’s offices, or even some sort of “official” place that can record the sale. The people attending the closing should be the buyer and the seller, their attorneys, perhaps their real estate agents (though they don’t actually have to be there). a closing agent or perhaps a rep from the mortgage company.

There are also some insurance dealios that might have to happen?definitely make sure you know all of these fine print points with your attorney. Buyers need to come to the closing with major moolah in hand, most of which is described in your purchase application, where you get all the information for the board package, and also in your sales contract. For a co-op, you’ll have to pay a move-in fee, your attorney, filing fees, bank fees, maybe a flip tax and perhaps a maintenance adjustment and appraisal. If financing, you’ll need a recognition agreement, loan origination fee, UCC-1 filing fee, and perhaps a pre-paid mortgage interest. That was quite a mouthful. Curbed is not an attorney, so make sure you get all the details from yours before the closing!

The attorneys will have a closing statement that breaks down the costs paid by the buyer and the seller, and how much money they should walk away with after brokers and attorney’s fees, flip taxes, and the like are paid off. It will list the buyer’s and seller’s “debits and credits” in the transaction. These all have to be paid in certified checks?when someone is paying in all cash, they’re not expecting Scrooge McDuck to appear with a bag of gold to complete the transaction. Checks are fine.

Real Property transfer tax, usually paid by the seller, is also given at this time. You can read all about it in the melodious words of the government. If you’re buying an apartment that costs over a million bucks, a “mansion tax” is also thrown at you which is equal to 1 percent of the purchase price. Since the average price of a NYC apartment is over a million dollars (reports lately have shown it around $1.5 million), this is pretty common. Dig a little more into mansion taxes here.

Closings can take a shockingly long time to complete if both sides are not prepared, so make sure you go over as much as possible with your attorneys beforehand. You’ll need to sign a bunch of stuff and bring a bunch of checks. If you have no clue what the papers mean, things might drag on a bit. If the buyer and seller are in agreement, hopefully it shouldn’t be too painful.

The most symbolic part of the closing is when the buyer receives the keys to their new apartment. Of course, you should probably go right home and change the locks, but it’s a nice thought anyway. If the seller is really nice, they might even treat you to the warranty on their fridge.

Finally, the attorneys will record the deed and mortgage in the public records, where you can look them up and get your real estate fix on for the day. Of course, Curbed will tell you about all the cool ones so you don’t have to bother.
· Co-op Boards 101: Board Packages, Interviews, and Turndowns [Curbed]
· Curbed University archive [Curbed]