Sealing the Deal: A Guide to Closing Your Condo Sale
Introduction
Navigating the intricate process of selling a condominium can be both exciting and daunting. The true climax of your journey is at the closing table, where the sale is completed.
We aim to demystify the final stages of this process. With over 40 years of combined experience, Michael and Dina have closed hundreds of condominium sales and have the expert insights, actionable steps, and a thorough understanding of what to expect.
This guide will arm you with the knowledge to ensure a smooth, successful conclusion to your condo sale.
Preparing for the Final Stages of Selling Your Condo
Understanding What “Closing” Means in Real Estate
In real estate, closing signifies the finalization of the property sale transaction. It’s the culmination of several sequential processes, including negotiation, contract signing, home inspection, and mortgage approval. Ultimately, it culminates with the transfer of the property from the seller to the buyer. This exchange is marked by the buyer’s payment to the seller, often facilitated by a third-party closing agent.
Importance of Preparing for the Final Stages
Preparation is key when moving into the final stages of selling your condo. A well-prepared seller can prevent common pitfalls that can delay or derail a transaction. Being proactive about issues like contract contingencies, potential title problems, and buyer financing approval can expedite the closing process, save you money, and reduce stress.
Who are the Parties in the Closing Process
Several parties typically participate in the closing process. These include the seller, the buyer, real estate attorneys, real estate agents, mortgage lender representatives, a representative from a title company, and a closing agent – typically a representative from the property management company managing the condo.
Roles of Different Parties in the Closing Process
Each party in the closing process plays a unique role. The seller and buyer negotiate terms and agree to contract conditions. Real estate agents facilitate this negotiation. Real estate attorneys negotiate and draft the contract of sale. The mortgage lender provides the necessary funds after assessing and accepting the buyer’s credit risk. Lastly, the closing agent ensures that all contractual obligations are fulfilled, prepares closing documents, and handles fund transactions.
The Critical Steps in Closing a Condo Sale
Signing the Contract of Sale
The contract of sale is a crucial legal document that outlines the agreed terms between the buyer and the seller. It includes the price, property details, inclusions, exclusions, any contingencies, and the target closing date.
Both parties must thoroughly review this document before signing. In New York City, the buyer signs first and returns the contract along with a 10% deposit to the seller’s attorney. Once the seller countersigns and the fully executed contract is returned to the buyer’s attorney, the contract phase is complete.
Condominium Sales Application
Once the contract of sale is fully executed, the buyer must complete the condominium sales application, commonly referred to as the “board package”. This includes personal and financial information along with supporting documentation.
PRO TIP: Have us assist you in preparing the application package
Condo sales applications have traditionally been less involved than similar applications for co-op apartments. We have witnessed this change over time. Condo applications are growing more and more onerous. We have worked with our clients on completing hundreds of these applications over the years and we have considerable expertise in giving the board what it wants, and presenting it in a clear, cogent manner.
Fulfilling Contract Contingencies
Contract contingencies are specific conditions outlined in the purchase agreement that must be satisfied before the sale can be completed. A common example is repair work the seller must complete prior to the closing.
If for some reason the contingencies are not fulfilled prior to the closing, the way we see this most often resolved is to set aside sufficient money to cover the repair in escrow. Once the contingencies are fulfilled, the money is released.
Handling Inspections and Appraisals
The buyer sometimes requests a property inspection to identify any potential issues with the condo unit. In New York City the inspection, if any, typically occurs prior to the signing of the contract of sale. If serious problems are discovered, the buyer may negotiate for repairs or price reduction.
Because most condominiums in New York are apartments in large multiunit buildings, items that are typically the subject of property inspections for standalone private homes don’t directly apply. Foundations, roofs, structural elements, plumbing, electrical, pests, HVAC, …etc. are typically associated with the entire building, and not the individual unit.
If the buyer is financing, an appraisal, ordered by the lender, confirms the property’s value and is a necessary condition for obtaining a mortgage.
Resolving Title Issues
A title search verifies the seller’s legal ownership and confirms there are no outstanding liens or disputes. If issues arise, they must be resolved before the sale can proceed.
Managing Buyer Financing Approval
Buyer financing approval involves the mortgage lender finalizing the loan details based on the appraisal and the buyer’s financial credentials. Once approved, the lender prepares a closing disclosure detailing loan terms, closing costs, and payment schedules.
Final Walkthrough and Addressing Last-Minute Issues
The final walkthrough occurs just before closing, giving the buyer a chance to ensure that the property’s condition hasn’t changed and agreed-upon repairs were made. Any issues identified during this walkthrough must be addressed before the sale concludes.
PRO TIP: What the walkthrough “isn’t”
We conduct walkthroughs all the time, on both buyer and seller sides. An issue we often deal with is where buyers view the walkthrough as a “punch list”. Meaning they think that this is an opportunity to flag items for repair or touch up.
This is not what the walkthrough is. It’s purpose is to ensure that the apartment is in the same condition that it was on the day the contract of sale was signed.
If you now discover that the floor is discolored where a rug used to be, that is not a flaw. Similarly for other, (mostly cosmetic). Flaws. What would be an issue is gross damage to the unit that happened after the contract signing.
These problems can be avoided by the buyer’s broker by properly educating their buyer prior to the actual walkthrough.
Navigating the Closing for Your Condo Sale
What to Expect at the Closing Table
At the closing table, the buyer and seller, along with their attorneys, finalize the transaction. All parties review and sign final documents, funds are exchanged, and the seller hands over property keys.
We see more and more closings done either remotely or through power of attorney, such that all parties are not necessarily in the same room.
Reviewing the Closing Disclosure and Settlement Statement
The closing disclosure and settlement statement provide detailed breakdowns of the mortgage terms, transaction costs, and pro-rated expenses. It’s crucial for sellers to review these documents thoroughly before signing.
Your attorney will cover this in great detail with you.
Transfer of Title and Keys
Once all funds are exchanged, the title is transferred from the seller to the buyer. The seller also hands over all keys, codes, or other means of access to the property.
Post-Closing Responsibilities and Reflection
Handling Post-Closing Paperwork and Formalities
Post-closing, the seller should ensure they have copies of all closing documents for tax purposes. It’s also important to cancel or transfer utilities, update insurance, and notify relevant parties of the address change.
Learning from the Experience and Moving Forward
Reflecting on the selling experience can provide valuable insights. Understanding what worked well and what could be improved will be useful for any future real estate transactions.
A good real estate agent, like Dina or I, will walk you through the process long before closing is imminent. We firmly believe it’s best to explain the entire sales process from start to finish right at the beginning of sales process. “No surprises” is our motto and is the driving force behind my writing these articles.
Conclusion
Closing a condo sale involves many critical steps, from signing the contract to post-closing responsibilities. Proper preparation and a clear understanding of the process can help ensure a smooth transaction. Michael and Dina Sussilleaux can guide you through the entire sales process.
Please consider leveraging our experience, expertise, and reputation for trustworthiness to represent you in the sale or purchase of your Manhattan or Brooklyn home.
Where to next?
Continue on to the next article in the Selling Your NYC Condominium – A Step-by-Step Guide section: Tips for Choosing the Right Real Estate Broker to Sell Your Condo. To return to the previous article in the series, click HERE.
You can jump directly to the main page for all of our informative articles concerning condominiums HERE.
Do you have any questions? Feel free to reach out to Michael and Dina to discuss your situation with you and address any questions you may have about real estate.
Frequently Asked Questions
How long does the closing process typically take when selling a condo?
The closing process usually takes 45 to 90 days, but it can vary based on the buyer’s need for financing and contract terms and contingencies.
Who attends the closing meeting during a condo sale?
Typically, the closing meeting includes the buyer, seller, their respective real estate agents, and a closing agent.
What could possibly go wrong during the closing process of a condo sale?
Potential issues include disagreements during the final walkthrough, financing issues, or unexpected title problems.
What are some common errors sellers make during the closing process?
Common errors include not fully understanding the contract, ignoring contingencies, and poor preparation for the final walkthrough.
How can I ensure a smooth closing when selling my condo?
Ensure smooth closing by thoroughly financially qualifying the buyer, understanding the contract, addressing contingencies promptly, preparing for the final walkthrough, and maintaining open communication with all parties involved.
