Tuesday, March 1, 2011

Clear to Close!!!! Wait, What Does That Mean?

You have an accepted contract, a mortgage commitment from your bank, and you've packed up all your worldly possessions into cartons and boxes that once shipped food products, office supplies, and/or electronics. The close date you put on the purchase offer is drawing oh so near... So what should you expect now? There are so many questions running through your head! You feel unprepared! Well read on, Conqueror of the American Dream! Hopefully the next passage will ease your troubled mind.

When should I schedule my movers and take time off from work?

DO NOT (and I stress this) schedule movers, rent trucks, get time off, tell the cable guy to come, etc. until your attorney has confirmed a closing date. The purchase offer you placed on the house has a date written on it, and all parties are going to try to make that date happen, but many times you will not close on this date.

Many factors are involved with a closing. Schedules, making sure all parties have reviewed what they need to review and are cool with it, money being in the right place, etc. are all things that need to be coordinated for the closing to happen. The date you are anticipating is good as a target, but you may close before or after what is on the written page.

I know it is hard, but patience is a good practice with a closing date. Scheduling a time to close is like conducting a ballet, and all the key players must be in place and ready for their cue. Your agent should act like the director, making sure everyone has had enough "rehearsal" and are ready for the "curtain to rise". 

Your lender may give you a "clear to close". That is great! That means that your lender is satisfied with everything they have, but they are only one part of the equation. It does not mean you will be closing tomorrow. Once again, it will depend on if all the players are set and ready to go. 

The date is approaching fast... how much money do I need to bring with me?

When you apply for your mortgage, you will get a "Good Faith Estimate" which will include a pretty good idea of what you should expect for closing costs. More often than not, you will not get the exact amount you will need to bring to the table until less than 24 hours prior to sitting down to sign the final papers. You will be notified by your attorney what amount you need to bring. They will let you know as soon as they know.

Once you have that exact number, you will need to go to your bank and get a certified check, money order, or official bank draft... You can not bring a personal check. Your bank should be able to do that on the spot. Don't worry, they are accustomed to it. 

What you should not do "on the spot" is transfer money into the account you wish to draw from. Transfer any monies you need for closing in advance. I usually recommend at least one week prior to the date on your purchase offer. Often, a transfer will take a day or two (sometimes more) to register... so be proactive and do it in advance, and transfer enough to have a cushion. If the closing amount comes in higher than expected, you want to be ready!

Where will the close take place?

On the contract, it states that the closing will happen at the Clerk's Office of the county you are buying in, or at the office of the attorney that is representing your lender (Yes, your lender has an attorney, too! Not just you and the seller!).

Of all the closes I have ever done, I have never had one happen at the Office of the County Clerk. Ninety percent of the closes I have been associated with have happened at the office of lender's attorney. You will find out the exact location when you get the call for the date and time of close. That call will come from your attorney.

When can I get into my new house, and when do I need to be out of my current residence?

This is a question that has many possibilities. It all depends on how the contract is written.

The usual way it happens is that once you sign the papers at the closing table, you can have access to your new home. Your attorney will give you the keys and you can go strait there if you wish! There are exceptions and I will list a few of them here:
  1. Your agent negotiates a pre-possession arrangement for you, which means that in the purchase offer you have an agreement with the seller to live in the house prior to close. Usually this will be accompanied with a rent payment to the seller, or a flat fee determined between the two parties. 
  2. The seller arranges a post-possession agreement, which works the same as above but in the opposite fashion. Rent or a predetermined fee is usually negotiated in advance.
  3. There is an issue that arises at close that all parties agree upon which limits your access to the property. This rarely happens, but it is a possibility.
Getting out of your current residence is also a variable. If you are renting, you will have to coordinate your move out date with your landlord. In these instances, I usually try to set a close date for mid month. The standard is that renters pay for the month on the first. Since you have already paid for the month and you have your new house in your possession, you have the time to move and clean (both places) at your relative leisure.

If you are selling another property, it will most likely depend on the close of that property. Most times, a seller will need to close on their current home to make the close of their new property happen, so it can be a busy day of paper signing along with truck loading! Each situation has a different set of negotiated conditions, usually making sure that nobody is pressured, put out, or homeless for a day (hopefully!). Working with a good agent (one like myself...wink-wink)... can guarantee that all goes smooth! 

If your agent is on top of things, he or she will be keeping you updated on the progress of the transaction. If you are informed on a consistent basis, then you will not be surprised by an alteration in the date and time of the close. Before, I stated the agent is the orchestrator of the process, so take to heart that a good director will insure that all players involved are up to speed on the happenings and are ready for opening night.

As always, I hope this addressed some of your concerns. If you have any questions, I welcome them in the comment section at the bottom. You can guarantee a quick response! Roc and Roll, amigos!


  1. Really great blog. Mr. Harrington is obviously veteran in the real estate business. I have been searching this topic FOREVER online and the information, directness, and knowledge of this writer is dead on. Keep it up Michael. If we ever decide to move, we will be giving you a call without hesitation!

  2. What happens if the bank got a verbal verification but still did not clear for closing?

    1. Rhonda- I would love to answer this question, but I need just need a tiny bit more information. What exactly did the bank verbally verify? In a real estate transaction, everything needs to be done in writing, nothing verbal is binding. In some instances, your attorney can get the verbal FROM the bank to start scheduling a closing day and time... if that is what you are asking, then it is just up to all parties (buyer, seller, and all attorneys involved) to come to an agreed upon time to sit down at the closing table and sign the paperwork. Does that answer your question?

  3. Here is what is the clear to close