YOU JUST FOUND A BUYER!! (so now what?)

Pete Betlem, President
Cornerstone Mortgage Co.,
Bellingham, Wa.

Certainly finding someone to purchase your home at an acceptable price is a big step, however, the deal isn’t done until you close the transaction. Most of the closing will be done for you by other professionals but there are some things that are required of you.

First, you must have a written agreement between Buyer and seller spelling out the terms of the transaction. Your best bet for getting this right the first time is to purchase a standard Purchase and Sale Agreement form from a local stationary store. Get several of them while you’re there - may save you another trip downtown! This form has blanks in it which require answers - fill in the form completely - even if the correct response is N/A or “not applicable”.

Second, while you’re at the Stationary Store, get a Seller’s Disclosure form. This is a questionnaire type form that addresses the condition of the home. YOU ARE REQUIRED to supply the Buyer with this disclosure. Failure to do so may land you in court if the Buyer finds some material defect in the home that was not previously disclosed - Be Honest - it’s cheaper than defending yourself later!! The Seller’s Disclosure should be considered an addendum to the Purchase and Sale Agreement.

Third, if your Buyer wants to give you earnest money with his/her offer, have them make the check payable to the Escrow Company that you have selected.

Fourth, take your completed forms and earnest money check to the Escrow Company and request that they “open escrow”. From that point forward you are pretty much on auto-pilot and the Escrow Officer will take over. Meanwhile, your Buyer should be making an application for a home loan with his/her mortgage lender. The mortgage lender will give their paperwork to your Ecrow Officer as well.

In case you were wondering what an Escrow Officer does (they are called Limited Practicing Officers -LPO’s) - they are a neutral, bonded entity employed by you and the Buyer to receive monies and papers from all parties in the transaction and handle the disbursement of funds and recording of documents in accordance with the law. It is mandatory that you utilize the services of an Ecrow Officer in the State of Washington with the one exception being that an attorney can perform the same function. Generally you will find that LPO’s are the most expedient way to go since they perform these tasks on a daily basis and are extremely efficient at it. All major Title Companies, i.e. First American Title, Whatcom Land Title, Chicago Title and Charter Title all have built-in Escrow Departments and can handle all phases of your transaction for you. There are also some very good independent escrow companies as well - our firm uses Select Ecrow for example.

As a Seller, you will incur some expenses along the way. The Escrow Officer will spell out your costs and the Buyers costs on a form called a HUD-1 Settlement Statement. On that form you can expect to see Sellers costs including (but not limited to) Excise Tax based on the sale price, 1/2 of the Escrow Fee, A Title Report Fee, and perhaps some prorations for water, sewer, garbage and property taxes. Your Escrow Officer will expain all of these costs to you at the closing. Buyers and Sellers usually come to the closing at different times to sign their respective papers prepared by the Escrow Officer. It is here that you will see all of your costs and get an explanation of those costs. The Buyers will come to the closing to sign their loan papers and bring in their down payment. When all parties have signed, the Escrow Officer (usually the next day ) will disburse the net proceeds of the sale to you after paying off your mortgage and deducting your closing costs.

As always, you can consult your attorney or a real estate broker if the purchase is complicated or you do not understand what you are doing. Both will charge for their services. This article is meant solely to give you a quick overview.

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