By Desja, Drafting Paralegal at Gasbarro Law.
Whether you’re buying your first home or selling your fourth, at some point you’re going to want the answer to one very important question:
What are my final numbers?
For home buyers, that usually means: How much cash will I need to close?
For home sellers: How much will I receive from the sale?
Those numbers may look like a simple total when you finally see them on your Closing Disclosure or settlement statement. But quite a lot goes into getting them there.
And unfortunately, the final number is usually one of the last pieces to fall into place before closing. There is a reason for that.
It all comes together through a process called balancing
Before we can give you a final number, we need to make sure all of the costs, credits, payments, adjustments, and other details of the transaction are accounted for correctly.
This process is known as balancing.
Think of it as the point where the work that has been happening throughout your transaction comes together on one Closing Disclosure or settlement statement.
Depending on the transaction, we may be gathering information from the lender, real estate agents, attorneys, municipalities, utility or fuel companies, and our own office records. Some of that information is available well in advance. Other pieces aren’t final until much closer to closing.
That’s why your numbers can continue to change even when your closing date is approaching.
What goes into a buyer’s final numbers?
For buyers, much of the information comes from the lender.
That can include loan-related costs such as appraisal fees and loan points, along with information about any first-time homebuyer programs you may be using.
There are also costs and adjustments related to the property and the closing itself. Depending on the transaction, these might include:
- Property taxes and escrow amounts
- Municipal recording fees
- Title insurance fees
- Seller credits included in the Purchase and Sale Agreement
- Real estate commissions
- Final water bills
- Oil or propane adjustments
- Reimbursements or other invoices associated with the transaction
The lender generally sends us an initial Closing Disclosure around a week before closing, and that’s when the balancing process really gets moving.
I compare the lender’s figures with the information we’ve already received and make any necessary adjustments. I check that property tax escrows correspond with the actual tax bills and that prorations use the correct billing cycles for the particular municipality because, naturally, they cannot all do things the same way.
We also account for any additional invoices, reimbursements, credits, or adjustments that have come in.
Then the updated information goes back to the lender for review.
Why can the numbers change before closing?
Sometimes everything matches quickly.
Other times, the Closing Disclosure may go through several versions before everyone agrees that the numbers are correct.
A lender might confirm that an expense was already paid. A final fuel adjustment might arrive. Information we’ve been waiting for may come in and require another change.
At the same time, there is another balancing process happening with the seller’s side of the transaction. The seller’s attorney needs to review the fees and prorations, provide their own figures, and agree with the amounts shown.
Each new piece of information can affect the final calculation.
Once both sides are in agreement and the Closing Disclosure is balanced, we can provide the buyer with the final cash-to-close amount.
What goes into a seller’s final numbers?
On the seller’s side, our role in balancing is a little different.
Much of the information may already appear on the settlement statement because documents and figures have been provided as the transaction progressed. My job as the Drafting Paralegal is to carefully verify that information and make sure the numbers reflect what has actually happened.
I review the appropriate municipal billing periods for prorations, verify which property tax payments have been made, and check whether anything has changed since we last reviewed the account.
I also make sure the amounts needed to clear title and the related fees are properly reflected.
If something doesn’t match, I contact the other side so we can resolve it. Sometimes that means correcting an error. Other times, new documentation shows that a municipality has changed a fee or billing period and the numbers need to be updated accordingly.
Once everything is squared away, we can send the final figures to the seller for review and signature.
So, when will you know your final number?
We know buyers and sellers want this number as soon as possible. We want you to have it, too.
But your final closing number depends on information from several different people and organizations, and some of that information simply isn’t available until close to the closing date.
Our job isn’t just to get you a number quickly. It’s to make sure the number you receive reflects the transaction accurately.
That means gathering the pieces, checking the details, reconciling differences, and making corrections when something doesn’t line up.
And if you receive your Closing Disclosure or settlement statement and aren’t sure what a particular charge, credit, or adjustment means, call us. We’re happy to walk through it with you.