Modern Real Estate Practice in Illinois Chapter 23: Closing the Real Estate Transaction

© 2008 Dearborn Real Estate Education Preclosing Procedures Buyer’s issues –Final property inspection –Survey Seller’s issues Title procedures

© 2008 Dearborn Real Estate Education Conducting the Closing Face-to-Face Closing –Closing agent or closing officer –The exchange Closing in Escrow –Escrow in procedure

© 2008 Dearborn Real Estate Education Conducting the Closing IRS reporting requirements Broker’s role at closing Lender’s interest in closing

© 2008 Dearborn Real Estate Education RESPA Requirements Applicability Exemptions Controlled business arrangements Disclosure requirements –Kickbacks and referral fees

© 2008 Dearborn Real Estate Education How the Closing Statement Works 1.Calculating buyer cash at closing 2.Calculating amount to be received by seller 3.Attorney’s fees 4.Broker’s commission 5.Recording expenses 6.Transfer tax 7.Title expenses

© 2008 Dearborn Real Estate Education How the Closing Statement Works 8.Loan fees 9.Tax reserves and insurance reserves (escrow or impound accounts) 10. Appraisal fees 11. Survey fees 12. Additional fees –FHA –VA –Conventional Accounting for Expenses

© 2008 Dearborn Real Estate Education Prorations The Arithmetic of Prorating –Statutory method –Actual number of days method Accrued Items Prepaid Items General Rules for Prorating –Real estate taxes –Mortgage loan interest

© 2008 Dearborn Real Estate Education Sample Closing Statement Basic Information of Offer and Sale –Computing the prorations and charges The Uniform Settlement Statement