What does Closing mean??

That’s a very good question and one not often understood by buyers and sellers. Let me start by saying each state has a different Real Estate process and this blog deals solely with the process here in the beautiful state of Arizona.

Unlike other states who often use Attorney’s to negotiate and complete transactions, Arizona relies on Realtors to negotiate the contract and title companies to do the actual background research and work related to the transfer of the property.

The “Closing” process starts once a seller has received and accepted an offer from a buyer. The first item involves the buyer depositing earnest money funds with the title company as identified in the Purchase Contract. The Earnest Money is an amount negotiated in the contract and is given as a sign of good faith that the buyer will complete the transaction. That amount goes towards the buyers total down payment and is subject to forfeiture as outlined in the purchase contract. The title company works as a neutral 3rd party in the transaction and will determine if the contract has been breach and which party would be entitled to the earnest money.

In addition to the down payment, the buyer and seller will also have what are known as “closing costs”.

For the buyer, these include:

  1. 1) Lender fees (if getting a loan). Every lender will charge different fees for their services

    which will be outlined in a Good Faith Estimate and Closing Disclosure. The lender will also require the home owner to often pre-pay a certain amount of taxes and home owners insurance. These will be collected upfront at escrow and put into an impound account.

  2. 2) HOA fees (Home Owner Association Fees). These will differ per community and the amount paid depends on what is negotiated in the purchase contract.

  3. 3) Title Fees - The title company will charge for their services which include doing a title search to ensure there are no liens on the property and it can be transferred without encumbrances. The title company will also coordinate payoff of the sellers existing loans, payoff of any HOA liens. and fees and work with the buyers lender to generate what’s known as a HUD1 Settlement Statement.

  4. 4) Title Insurance - Transactions in Arizona have two title policies issued. These policies are insurance in case things are missed during the initial escrow searches. Depending on the policy, it can can also cover missed building permits, land encroachments and other items. The seller provides a policy on behalf of the buyer but if the buyer is obtaining a loan, their lender will also require a policy to protect their interest in the property.

For the sellers, closing costs are similar to above and include: 1) Title Fees as above
2) Pro-rated amounts for Taxes and HOA fees
3) Escrow Fees

4) Title Insurance
5) Home Warranty Fees - Often, the buyers are

As your Realtor, I am happy to do a net sheet based on the purchase price to give you an idea of what the closing costs will be for your transaction as they do fluctuate based on the purchase price of the home and negotiated items. If buyers have limited up front cash, a good strategy if asking the seller to pay concessions. Every buyers situation is different and I help you negotiate an offer that will fit your needs best.

Other things that happen after contract acceptance are the home inspection, termite inspection, appraisal and loan application but I will cover those in depth in other blog articles.

In Arizona, loan documents are required to be at the title company 3 days prior to our negotiated Close of Escrow Date. The escrow officer (our contact at the title company) will call the buyers and sellers to arrange a signing appointment once the title company has received loan documents from the lender. A settlement statement will be generated, outlining the individual costs and items. At the bottom, it will show what additional funds buyers will need to send to the title company (through a wire transfer or cashier’s check). It will also show the sellers proceeds or amount owed in order to close escrow.

There will also be a final closing walk-through typically 3 days prior to close of escrow to ensure negotiated repairs are completed.

On the Close of Escrow date, the escrow officer will will send the closing packet for electronic recording once all funds have been received (from lender and buyer). Recording is the actual recordation of the sale, finalizing the transfer. Once verified, the title company notifies all parties and that’s when I can give you the keys to your new home. If you’re the seller, the title company will ask how you want your proceeds issued and you can either have it wire transferred or pick a check at their office.


I look forward to having the opportunity to help you with your “closing”. As your personal Realtor, I will walk you through each step and attend various appointments with you to ensure the process goes smoothly.


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HomeSmart Elite Group
8388 E. Hartford Drive • Scottsdale, AZ 85255
Phone: (480)326-2736 • Fax: (602)507-3521