This information is relevant to all Buyers and Sellers of real
estate. These are five important issues to know or be familiar with
prior to a closing. Closers hear a lot of questions and comments about
the transaction process at the closing table, but these are the most
common issues that arise at this crucial time from both Buyers and
Sellers.
1. Know and understand tax proration.
It is very important to understand that Colorado property taxes are
always paid in arrears, or after the year the property was assessed. To
calculate your tax proration, divide the total amount of taxes for the
calendar year prior to closing by the number of days into the year of
the closing date to get the tax amount per day. That tax rate is then
multiplied by the number of days from January 1 to the day of closing.
The resulting amount is then credited to the buyer.
2. Review your HUD and Settlement Statements. Be
sure to review these documents with your agent before closing. These
forms itemize the services provided to you in buying/selling your home
and how much each costs. Such expenses include items connected with the
loan, escrow account deposits, commissions, title charges, etc.
3. Be prepared to bring certified funds and your ID. Once
you have reviewed your HUD and Settlement Statements prior to closing,
you will now know if you owe any additional fees at the closing table.
Title companies will only accept certified funds, so a trip to the bank
prior to the closing is necessary. It is also important to bring your
ID for proper identification to all parties.
4. Sellers – be familiar with the tax documents.
Sellers be aware of the tax documentation you will need to sign the 1083
- Information with Respect to a Conveyance of a Real Property Interest,
the IRS form 1099 – used to report income, and to calculate the amount
of taxes owed to the federal government, and finally, FIRPTA – Foreign
Investment in Real Property Tax Act – a taxation law that imposes tax on
foreign persons selling real property in the US.
5. Buyers – know your loan terms. Buyers know your
loan terms before coming to the closing. There should be no surprises
from your lender and you should be aware of the charges and fees in your
loan package. Your closer will not be able to change these for you and
will delay closing if items in the loan package needs to be changed.
If you follow these points and communicate well with both your agent and lender, your transaction is sure to close smoothly!
Closing on the property is usually handled by the title company which
issued the title opinion. We will be with you to provide answers and
assistance for you during this process which usually takes from 30-90
minutes. I will be sure to review all settlement statements for you as
Buyer for accuracy and reasonableness.
Time of possession is established at the time of negotiating the
original offer. In Colorado, it is customary for the Buyer to take
possession at closing or up to 2 days after closing.
