- The Washington Times - Friday, August 11, 2000

Your boxes are packed and loaded into a moving van. Only one thing remains to be done before moving into your new house. The time spent at a closing table is the final step in the home-buying process, where buyer and seller prepare to sign their names on the dotted lines.

"During settlement, everything in the home-buying and selling process comes together," says Re/Max Elite Properties Realtor Linda Welch, who is based in Burke, Va. "Most people bring their moving trucks to settlement and go straight to their new home from there."

In today's hot real estate market, most buyers are going to settlement within 30 days of the original contract date. The quick turnaround makes it easy for a buyer to get confused about the home-buying process. But with an informed real estate agent leading the way, the gray areas of confusion should become crystal clear in a matter of minutes.

"A lot of buyers come to the settlement table fearing something unexpected will pop up and mess up their deal," Ms. Welch says. "But I have never seen a deal fall through at the settlement table. And surprises are extremely rare."

The buyer usually chooses a settlement company recommended by his or her real estate agent. The agent also will recommend, to save the buyer money, that the closing take place at the end of the month instead of the beginning.

"A buyer has to write an additional check to the loan company for the interest from the day of closing to the end of the month if they wish to close before the end of a month," Ms. Welch says. "That's why we tell people to close as close to the end of the month as possible."

And while some settlement companies offer discounts and incentives to buyers if they close between the first and 10th of the month, it doesn't seem to stem the end-of-the-month closing rush. Marc Lipman, a settlement agent with MBH Settlement Group in Annandale, says he and one other agent handle about 24 settlements a day during the last week of the month.

"This is why we need our customers to be informed and conscious of what's going on at the settlement table," Mr. Lipman says.

When going to settlement, a buyer needs to bring a picture ID and a check in the amount of the home purchase, or, if a loan is being used, a cashier's or certified check in the amount of the remaining down payment, including closing costs.

"When a buyer applies for a loan, a loan officer tells him the amount of money he needs to cover closing costs and the down payment," Ms. Welch says. "Although the loan agent doesn't know the exact charges for the settlement company, the home inspection, appraisal and other costs incurred by the buyer, the officer gives the buyer a 'good-faith estimate.' " Some of these costs, such as the home inspection and appraisal are considered closing costs, but are paid for before the parties go to closing. These charges are then adjusted off of the closing balance to be paid at settlement.

Ms. Welch says most loan officers' good-faith estimates aren't off by too much. If the estimate is higher than the amount of the cashier's check, arrangements are made to pay the difference. If the certified check is higher than the actual charges, a refund or credit is issued.

"Good-faith estimates can swing a few hundred dollars either way," Ms. Welch says. "That's to be expected. A good Realtor will tell her client that."

Also, the settlement company requires the buyer to provide proof of a hazard insurance policy on the new property.

While there may be minor issues to address at the closing table, most settlement meetings take about an hour. The buyer, seller and their respective real estate agents, along with a settlement agent gather at a closing company of the buyer's choice. As a buyer, one picks up the pen more than 10 times to sign on a lengthy legal document filled with standard contractual, legal jargon.

But it's a pretty standard contract, Mr. Lipman said. "The contract doesn't contain any 'surprises' for the buyer or seller especially if their agent has prepared and informed them of the process.

"We assume the buyer and the seller knows what's going on when they come to closing," Mr. Lipman says. "I know I will have to explain a few things, and am happy to answer any other questions, but the agent should have already filled the client in on what's happening at the settlement table."

Mr. Lipman says the contract tells a buyer four things: the buyer's interest rate, the buyer's loan payment, when the payment is due and the amount due at the closing table. Although most customers peruse the contract briefly, if the buyer or seller wants to read it thoroughly, he or she should make arrangements to come to settlement a few hours early.

"We really can't change anything in the contract at this point," Mr. Lipman says. "It is pretty standard stuff."

Mr. Lipman, who has been a settlement agent for more than 20 years, is also an attorney. But in Virginia, Maryland and the District, a settlement agent doesn't have to have a legal background just a license from his or her jurisdiction.

"Although I don't act as an attorney for either party at the settlement table, my legal background does come into play when I need to explain a section of the contract," Mr. Lipman says. "My job is to be a mediator between the buyer and seller, make sure all documents are executed properly, the funds are distributed properly and the new owner receives the property. Sometimes, there are small issues to resolve at settlement, but normally there is already and understanding between the buyer and seller."

A few days before settlement, the buyer has a final inspection of the home he or she is purchasing. At that time, the real estate agent for the buyer fills out a "walk-through inspection sheet." This standard document has a list of items that will "convey," or be left behind for the new owners, such as appliances and light fixtures.

"By signing the inspection sheet, a buyer is saying everything is in working order or in the condition it is supposed to be in, as promised by the seller," Ms. Welch says. "But if something is found to be inadequate or wrong with the condition of the home, then these issues are resolved at the settlement table."

Ms. Welch, who has been an agent for 16 years, says most walk-through items to be fixed at settlement are minor, but she has, on occasion, had some major issues.

"During the walk-through of a brand new home I had sold, we entered the home and found that all of the upgraded carpet had been cut out of the home it had been stolen," she says. "The seller had to replace all the carpet before settlement could take place."

Although sometimes problems found during a walk-through can delay settlement a few days or weeks, other problems can be taken care of quickly so settlement can go ahead as planned.

"Some buyers get a different feel for the home when they go to final inspection," Mr. Lipman says. "Especially if the home was occupied and had furnishings at the time they wrote up the contract."

Mr. Lipman says sometimes, buyers will find spots on the floor where rugs had hidden them or holes in the walls where pictures had hung.

"These are all issues that may come up at settlement, but can be resolved rather quickly if parties are willing," he says.

"It just depends on what the parties involved are willing to do," says Mr. Lipman. "If they agree to go on with settlement and the seller fixes the items afterwards, that is fine. It's our job to make sure all parties involved are happy with the deal that is taking place."

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