Closing Escrow

Closing escrow is the final step in completing a real estate transaction. It marks the transfer of ownership from the seller to the buyer and the disbursement of funds, including the broker’s commission. As an agent, you play a vital role in ensuring all transaction documentation is complete, compliance is approved, and funds are properly accounted for and distributed.

This lesson covers the key tasks involved in closing escrow, including document review, commission verification, and how the WE ARE REALTY team assists in finalizing the transaction.

Key Steps to Closing Escrow

1. Compliance Approval

Before closing escrow, all submitted documentation must be reviewed and approved by your brokerage’s compliance team.

Action Steps:

• Review your transaction checklist to ensure all required documents are complete and submitted.
• Confirm that any missing or incomplete items (e.g., contingency removals, disclosures, inspection reports) are resolved.
• Communicate with your compliance team to confirm the transaction is approved for closing.

Pro Tip: Use the WE ARE REALTY system to monitor the status of your compliance checklist and track any outstanding items.

2. Obtain Closing Documents from Escrow

Once the transaction is finalized, escrow will prepare and distribute the official closing documents.

Documents to Request:

• Closing Disclosure (CD): Provides a detailed breakdown of all costs, credits, and adjustments.
• Settlement Statement: Summarizes the financials for both buyer and seller, including disbursements.
• Grant Deed or Title Transfer Document: Confirms the legal transfer of ownership.
• Broker Commission Statement: Details the broker’s commission payment.

Action Steps:

• Contact the escrow officer to request copies of the closing documents.
• Verify that all details align with the purchase agreement, including final pricing, credits, and expenses.

3. Verify Broker Commission

After closing, the escrow company will disburse the broker’s commission as outlined in the purchase agreement and commission instructions.

Action Steps:

• Confirm with escrow that the broker commission has been processed and paid.
• Verify the commission amount matches the agreed percentage or flat fee specified in the purchase agreement.

Pro Tip: Document any discrepancies immediately and coordinate with escrow to resolve them.

4. Transaction Accounting and Agent Commission Disbursement

At WE ARE REALTY, the transaction accounting and agent commission disbursement are handled by our internal team.

How It Works:

• Once escrow has processed the broker commission, the WE ARE REALTY team will handle the internal accounting.
• Your commission will be disbursed to you according to your agreed split or compensation structure.
• You’ll receive a detailed breakdown of the disbursement for your records.

Action Steps:

• Confirm with the WE ARE REALTY accounting team that your commission has been processed.
• Review the disbursement statement to ensure accuracy.

Best Practices for Closing Escrow

1. Maintain Communication: Stay in contact with the escrow officer, compliance team, and WE ARE REALTY staff to ensure a smooth closing process.
2. Double-Check Documentation: Review all closing documents for accuracy before and after receiving them.
3. Follow Up Promptly: Address any outstanding issues, such as missing documents or commission discrepancies, immediately to avoid delays.
4. Celebrate Success: Closing escrow is a significant milestone—acknowledge the accomplishment and strengthen your relationship with the client.

Case Study: Successfully Closing Escrow

Scenario: An agent represents a buyer purchasing a 4-unit residential income property. The escrow process is nearing completion, and the agent needs to ensure all closing tasks are finalized.

Approach:

1. Compliance Approval: Reviewed the transaction checklist and confirmed all documents were submitted and approved by compliance.
2. Closing Documents: Requested and received the closing disclosure, settlement statement, and grant deed from escrow.
3. Commission Verification: Verified with escrow that the broker commission was processed and matched the agreed-upon amount.
4. Agent Commission Disbursement: Confirmed the WE ARE REALTY team processed the agent’s commission correctly and on time.

Result: The transaction closed smoothly, and the agent received their commission promptly, leaving both the buyer and agent satisfied with the process.

Conclusion

Closing escrow is the final step in completing a successful transaction. By ensuring compliance approval, reviewing closing documents, and verifying commission payments, you provide a seamless experience for all parties involved. At WE ARE REALTY, our team supports you by handling transaction accounting and disbursing your commission, allowing you to focus on growing your business.

Next Steps:

1. Familiarize yourself with the transaction checklist and compliance requirements.
2. Use the WE ARE REALTY system to track closing tasks and documentation.
3. Celebrate the successful closing with your client and leverage the relationship for future referrals.

In the next lesson, we’ll explore how to nurture client relationships post-transaction to generate referrals and repeat business.