Tag Archives: payment at closing

The Perfect Closing-One Lawyer’s Dream

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Strangely enough, after more than forty years of doing residential closings, I cannot remember one closing which was perfect in every way. My state, Massachusetts, still has lawyer’s serving as closing agents and also reviewing the title and writing the title insurance. This means that my firm, Topkins & Bevans, is responsible for checking at the appropriate registry to make sure that the Seller really owns the property, and there are no liens which cannot be paid off, or accounted for, at the Closing. We also need to check on water and sewer charges, and other municipal liens (such as property taxes) and common area fees, where a Condominium Unit is involved. Once we receive the rest of the “figures” from the Lender, we produce a HUD-1 Settlement Statement and distribute same to the Buyer and Seller, most of the time at least 36 hours prior to the Closing

There are a lot of balls up in the air, and our job is to try to assemble all of the players, and have each of them walk away with the thought that they had been well attended to, and fairly treated. So, in a perfect world, these are the goals, which I would always try to attain in my “perfect closing”:

1. The Buyer. Buyers are almost always nervous, whether this is their first, or twenty-first, purchase. My job is to make them calmer. I do this by being prepared for each closing. The Form 1003, which is a part of the Lender’s closing package, is packed full of information. I can find out the age of the Buyers, how many kids they have, what they do, and where they work. This almost always leads to a comment like:”Oh, you are a nurse, my sister-n-law is a nurse.What is your specialty?” or “Oh, you have four children, I have four children, where are they at school?” Get the picture!!! I have identified something I have in common with the Buyers. I am a human being, too, not a robot who is there to make sure they do not purchase the home of their dreams. I tell my Buyer at the start that I will take as much time as they wish going over, and explaining, the HUD-1. I tell them that this is really the most important part of their closing. The numbers on the HUD-1 help them to establish an “opening balance sheet” for their home. I never try to rush closings; this is a big moment for the Buyers, and I want them to relish it. Whenever possible, I take a picture of the Buyers with my digital camera after the Closing and send it to them with an email. I want them to have a memory of their “big day”

2. Sellers. Sellers have feelings, too. I tell them that I will explain the HUD-1 to them as well, especially if they do not have an attorney present. I try to move the closing along so the Seller is not inconvenienced.

3. Realtors. Most realtors come to closings. I try to involve them in the proceedings as much as they wish. I will ask their opinion on certain issues, and assist them by having an extra copy of the HUD-1 available for them to take with them. Lately, I have been trying very hard to make sure that Seller’s Agent, or the Buyer’s Agent, gets paid from my Client’s Account at the closing. These people have worked as hard as the Listing Agent for their commission, and there is no reason to make them wait additional weeks to be paid.

4. Mortgage Professionals. Most of my Originators do not attend the closing. I think they should but they do not. Since they are not there, I ALWAYS call or email them after the closing is completed. I tell them just how the closing went, and if the closing went especially well, I urge them to contact the realtor(s) or Buyers to inquire. The positive reinforcement the originator receives may be helpful for future referrals.

If I can do all these things every time, my closings will be perfect.I am not there yet, but at least I know what I am shooting for. I would be interested in hearing from any of you with helpful hints as to how I can make my closings better. I used to have a slogan “my closings close”. That is an important statement, but I would rather be able to say “My closing closed, and I enjoyed they way I was treated”.

Payment at Closing–A suggested “Ounce of Prevention” for Buyer’s Agents

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Buyer’s agency is a relatively recent phenomena in Massachusetts. While it has been my practice to pay the Buyer’s Agent directly at closing, I am informed by Buyer’s Agent clients and friends, that this is not always what transpires. Many times, the Buyer’s Agent must wait for the Listing Agent to “process” the final closing transaction, and then make remittance to the Buyer’s Agent some time in the future. I am aware of one situation where the check delivered two weeks after the closing was returned because of insufficient funds in the Listing Agent’s checking account.

The Buyer’s Agent works for the Buyer, even though payment of the Buyer’s Agency fee is geneerally made by the Seller.There follow several suggestions for Buyer’s Agents which can mitigate the delay, and other problems, associated with the current normal practices:

                 1. Manage the Deposit at the time of Offer. If the amount of Deposit can be limited to no more than the fee which is due to the Listing Agent, the ability of the closing agent to make direct payment to the Buyer’s Agent is greatly enhanced. If the Seller insists on a greater Deposit, have the Deposit split in such a way that no more than the amount to which the Listing Broker is entitled is placed in escrow with the Listing Agent. The remainder of the Deposit may then be placed in escrow with the Buyer’s Agent to insure prompt payment after closing.

                 2. Have the Deposit placed in the Escrow Account of the Seller’s Attorney. Insisting on this condition will take the power away from the Listing Agent to sit on the Deposit. Because having a check drawn on an Escrow Account of an attorney returned for non-payment is an ethical violation which will subject the attorney to disciplinary action by the Massachusetts Board of Bar Overseers, the safety and security of the Deposit is greatly enhanced. The Seller’s attorney may either hand over the Deposit to the closing agent at closing, or make direct payment to the Listing Agent and the Buyer’s Agent at the closing. The treatment of the Deposit should be carefully spelled out in the Offer, and then reinforced in the Purchase and Sale Agreement for the transaction, See Paragraph 3 below.

                3. Take Extra Care to Make Sure that the documentation for the transaction provides for payment at closing. As a Buyer’s Agent, you have an obligation to review the Offer and the Purchase and Sale Agreement and Rider(s) thereto, on behalf of the Buyer. Make sure a provision is included in both documents that specifically directs the closing agent to make payment of the fee due to the Buyer’s Agent,directly to the Buyer’s Agent ,at the closing. If the Seller has executed a document with these instructions, the closing agent has no choice but to adhere to the specific provisions of the Purchase and Sale Agreement.

You, as a Buyer’s Agent, have worked hard on your customer’s behalf to earn your commission. The steps set forth above should assist you not only in obtaining your commission, but. just as importantly, obtaining your commission at the same time as the Listing Agent obtains his or hers. It is time to make the playing field level for Buyer’s Agent and adoption of the measures set forth above should be  step in the right direction. See my blog: www.realtorsresourcblog.com for more suggestions and comments.