New Home in a Couldesac

Congratulations! You’ve found a buyer for your house. You signed the purchase agreement and got the earnest money deposit, and all that’s left to do is close the deal. As a homeowner, you know there are a lot of numbers involved in a mortgage transaction, and it can be difficult to keep them all straight. Luckily, there’s a simple form that can help.

You may have heard about the new closing disclosure forms that buyers receive as part of the home loan process. If you’re moving out of your old home and into a new one, you may even be getting one of these yourself. What you might not know is that the seller receives a closing disclosure form as well.

The purpose of a seller’s closing disclosure is to show the purchase price and also itemize expenses for anything agreed to in the purchase agreement.

First, we’ll go over the types of things a seller might pay for and then get into what’s listed on the form.

What Fees Would a Seller Pay?

You’re the one selling the house, so why would you have to pay for anything at closing?

Anything you owe on the mortgage is due when you close the sale. That’s the first big thing to think about from a seller’s perspective.

One additional cost that buyers and sellers often both have to pay is their portion of the commission for the real estate agents involved in the transaction. This would be enumerated in your seller’s disclosure statement.

You might also negotiate to pay your prorated portion of the property taxes or homeowners insurance for the period you’re still living in the home.

Then there are seller concessions, which are often decided on during negotiations between buyers and sellers. Paying for all or a portion of the title insurance, the cost of the appraisal or prepaid interest points can sometimes help you close the deal faster and lock in a buyer.

Buyers will sometimes use seller concessions in order to lower the amount they have to bring to the closing table and roll their own costs in to be paid over the life of their loan. In this arrangement, the seller agrees to pay the closing costs, or a portion of them, in return for a higher sales price.

The amount that a seller can pay toward these costs may be limited based on the buyer’s down payment and the specific loan they’re applying for.

In addition to seller concessions, a seller might pay if the property needs any repairs. Depending on the loan program a buyer is using, there may be a requirement that repairs be completed before the property can actually be sold. You and the buyer might have a similar agreement to repair things that might come up during the inspection that would be worked out as part of the purchase agreement.

By the time you factor in all the potential expenses for both the buyer and the seller, it can all be hard to keep track of. That’s where the seller’s closing disclosure form comes in.

Seller’s Closing Disclosure

The seller’s closing disclosure is really an abbreviated version of the buyer’s version of the form. It shows the seller’s portion of the fees associated with the transaction, including the mortgage payoff amount and anything the seller has agreed to pay for.

This closing disclosure shows a line-item breakdown of every cost paid by the seller and whether it was paid before or at closing. It’s prepared by the closing agent for the date of the close.

The document shows the purchase price, the cost to pay off the existing mortgage and any other liens on the property, and any adjustments in the purchase price for prepaid or unpaid local taxes.

Next, it goes over any costs the seller agreed to pay during negotiations with the buyer. This is where seller concessions would be listed. Prepaid escrow items are also here as well as anything else that might have been negotiated between the parties.

Receiving the seller’s disclosure is one of a few things that happen at the closing of your home sale. For more information, check out our post on what happens at a home loan closing.

Do you have questions about the seller’s closing disclosure form? Let us know in the comments, and we’ll get you the answers.

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This Post Has 20 Comments

  1. I am the seller and I signed a buyer already signed closing statement. The closing statement I signed netted to me the seller a different amount that was deposited into my account. I contacted the title company and they are claiming that the amounts were altered and incorrect calculated. As I put everything in their hands being the title company I did not check their math and was happy with the amount so I signed. They are refusing to honor the amount on the closing statement is this legal?

    1. Hi Lizette:

      I would talk to the title company and try to get in contact with the lender as well. If you’re unhappy with their resolution, I would take it to court. I can tell you that the disclosure forms are supposed to be highly regulated.

  2. I was pre approved for my home loan based off my credit and income which includes rental income…has anyone been denied the final approval based off tax deductions from rental property income..or what are the chances of being denied after pre-approval..i close in a week so you can understand my concern.

    1. Hi James:

      There are lots of factors that go into final approval including the fact that the house has to pass appraisal, etc., but in terms of income, you’re qualified based on gross income and not income after taxes. Since it’s a rental, the other thing that the lender would look at is the likely continuance of the income, so they would ask to see rental agreements. You also can only use a percentage of that income to help you qualify in order to account for the time it would take you to find a new tenant if someone moved out. Hope this helps!

  3. I should have mentioned I am the seller…..I close tomorrow and the final seller’s statement I received shows the purchase price higher than what was agreed upon. Is this correct? Does anything change from agreement up until closing?

    1. Hi David:

      I would start by contacting your real estate agent if you have one and going from there. You may also be able to contact the buyer who can talk to the lender and make sure everything is properly in order.

  4. the purchase price on the sellers statement is higher than what was agreed upon. how does that happen and what can be done?

    1. Hi David:

      The only thing I can think of is that has to be a paperwork mixup. I think you need to talk to the lender involved and see if that’s what it was or if there’s another explanation. You can then go from there. Thanks!

  5. As a seller I agreed to pay Up to $4000 towards closing.

    Am I allowed to see a breakdown of where that $4000 went?

    1. Hi Georgann:

      That’s the idea of the seller’s closing disclosure. It’s a line-item breakdown of the money you’re making from the sale as well as the costs you agreed to pay. You get it at the closing table. Hope this helps!

  6. I received my Closing Disclosure documents yesterday and I didn’t see the closing cost amount the seller agreed to pay towards my closing costs and I didn’t see the appraisal fee they said I will get back at closing which would be credited to me. Should it be on my Closing Disclosure?

    1. Hi Trish:

      I recommend speaking with your mortgage lender about any questions you have on your closing disclosure as soon as possible. That way, if something isn’t right, you can get it corrected before closing. If you and the seller agreed on credits and there was an amount you were supposed to get back for appraisal, you should see the credits on the form. You should definitely reach out to your lender.

      Thanks,
      Kevin

    1. Hi Bernardo:

      The closing agent is in charge of preparing the seller’s closing disclosure, so there’s no waiting period and you get it on closing day.

      Thanks,
      Kevin Graham

  7. We (the sellers), received the closing disclosure 2 weeks before settlement. Everything was spot on with all figures and the amount we would receive. After final closing and signing, we realized the amount we would receive had changed to the tune of $25,250. What recourse do we have? Can the lender change the closing disclosure without allowing us to review it prior to the date of signing?

    1. Hi Joanne and Larry:

      I want to make sure you get the most accurate information possible about what can change and when. I’m going to recommend you talk to one of the Home Loan Experts by calling (888) 980-6716. They’ll be able to give you guidance.

      Thanks,
      Kevin Graham

  8. We are the sellers. We signed all paper work for the sale of a house after briefly reviewing the closing disclosure. Now we found out the amount the title company entered in the “due from seller” section for the payoff mortgage loan is $900+ higher than what we actually owed to the mortgage company. Can we still get our money back? We were not provided this information before closing to have time to make a little bit of a research.

    1. Nothing is supposed to change from the closing disclosure. If it did, I would contact the mortgage company and the title company and see what’s going on.

    1. I suspected that there has been some form of loan disclosure as long as there have been mortgages. However, these particular regulations around loan estimates and closing disclosures went into effect in October 2015.

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