When people ask me questions about selling houses I try to stick to the simple answers because almost any topic could involve a response as long as a book! So, when I first bought a house to re-sell and I was learning how to remodel and how to sell my house I quickly discovered that there is one government form that spells out how much money I will actually receive at closing. The form is called a HUD-1 and it is basically an elaborate list of all the expenses involved in buying and selling a house.
Federal legislation in the 1970s, recently updated in 2010, requires that a HUD-1 statement be provided to the seller and to the buyer at least one day prior to closing. Nobody really enjoys talking about legal forms, it’s rather boring, but your HUD-1 statement is one legal form you do not want to overlook because it is truly interesting. Until you’ve become familiar with HUD-1 forms, I mean until you’ve seen more than one and know what you’re looking at, it may not seem interesting. But the truth is, this form reveals exactly how much money the buyer will be paying for the house and the closing costs, and it reveals exactly how much money the seller will receive at closing. Now THAT is interesting!
No matter how many times I’ve looked at HUD-1 statements prior to closing I make a point to look at each new one as though it’s the first one I’ve ever seen. Any real estate professional will tell you pretty much the same thing. It’s not good to become complacent and simply scan the document because real estate brokerage firms, title companies and attorneys have been known to make errors from time to time. The numbers on your HUD-1 are so incredibly important to both the seller and the buyer that both parties should really be certain that they understand exactly what’s going on before signing it.
Both the buyer and seller may eventually sign the HUD-1 form to acknowledge that they have seen it and accept it, although signature is not always a requirement. It would be fair to say that I find errors in the preliminary HUD-1 form more than half the time when I am buying or selling a house. That may seem like a very high percentage, but there is so much information on the form and much of it requires exacting calculations based on the exact date of closing. Since closing dates may change, that means the HUD-1 numbers may have to change, too.
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