What should first-time buyers expect at closing time?

To be excited and nervous!  The most important thing is to review closing costs with their attorney or title closer depending on if you are in a state where title companies close vs. attorneys.  Having an idea of what costs and checks need to be settled at the closing time is important.  It is not just the down payment balance if there is one and the mortgage check from the bank... there are settlement costs such as the property taxes.  The buyer will need to reimburse the seller for what property taxes they have paid for the future. Also... small items which many people forget... IF there is an oil tank... a final reading of the oil left in the tank.  The buyer will reimburse the seller for the oil he has paid for which he is leaving behind!  The type of mortgage will be a factor in closing costs. Recording of title and deed have costs affiliated with them.  Attorney fees if you are having an attorney represent you as well as, title insurance, and homeowners insurance. These are a few examples of not individually large costs but together they may add up to a few thousand dollars.  
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What paperwork do they need?

Paperwork depends on the state the property is being purchased in, and the mortgage a buyer has gone for... also what part of the transaction you are at.  When working with a Realtor there are certain required disclosure forms which need to be presented and signed.  For example in NY a buyer will be required to execute an Agency Disclosure form which Discloses whom the real estate agent(s) represent and what that representation means and the fiduciary duties and obligations created by the form.  They will also be presented with a Lead Disclosure form if the house was built prior to 1978.  Their may be an exclusive representation agreement with the real agent.  There may be an affiliated business disclosure if the buyer is being offered services by a related company for mortgage, title or insurance.  For the mortgage... pay stubs, two years tax returns, verification of income, disclosure documents form the bank.  FHA may require copies of home inspections, and additional documentation.

What does their attorney do at closing?

The attorney explains all the forms that the buyers and sellers are executing including, the mortgage note, the recording, the IRS notification, any and all documents which need to be signed.  They will also represent the buyer for any issues which may have come up at the walk thru of the property by the buyers before the closing.  For example if an appliance does not work or if garbage was left behind and needs to be removed, or there is a surprise roof leak.  Money may be put in an escrow account to pay for such items or credited to the buyer.  Prior to closing the attorney will review the title to make sure it is free and clear and can title can be passed to the buyer.  Some additional items are the following:

Examining title records (previous sales) looking for errors or issues that could delay the sale

Resolving any discovered issues prior to the close

Verifying that the seller has the right to sell the property

Negotiating and explaining the terms of the contracts and loans

Reviewing all the documents to ensure accuracy

What are all the closing costs first-time buyers can expect to pay?  

This totally depends on the type of mortgage the buyer applies for, if there are points due to reduce the rate, settlement, title, recording, insurance, attorney fees, bank attorney fees, misc. additional settlements, insurance, moving costs, utility deposit if required, etc..

How do they settle their down payment, paying the Realtor/closing agent/attorney/etc.?

Depends on the state they are in.  Depends on if their agent is being paid by the seller or the buyer.  Usually certified or bank checks for the large items, personal may be accepted for some settlements, also attorney escrow checks.

Are there any other costs that should be considered?

Remodelling or repairs which are known about, decorating, home maintenance costs such as gutter being cleaned, lawn care, snow removal, water, etc.  Any community fee or home owner association fees... etc.

Does buying a foreclosed home or short sale beget a longer closing time?

Keep in mind there is a BIG difference between a foreclosed home or a pre foreclosure or short sale.  A foreclosed home can close quickly. Some states take a bit longer to process the red tape which can be 45 to 60 days.  Other states can close as quickly as two weeks to 30 days. A short sale can take many months.  Buyers can be in contract for 6 plus months some times.  A foreclosure can close quite rapidly as quickly as a mortgage can be put in place or a cash buyer can perform.  A short sale maybe in contract, a buyer may have had an appraisal and negotiations with the bank holding the note can take several months to reach an agreement.  Many buyers are forced to pay for a second appraisal since each one is only good for 90 days. Sometimes it may not even close if the bank holding the mortgage will not accept the lower selling price.  The buyer does not just negotiate with the seller but also the bank(s) holding the note(s).  It is also a very emotional time for many of these sellers and that can add to the timeline.

This article was submitted by:

JP Endres Fein

2012 Secretary / Treasurer, New York State Association of Realtors

2010 Realtor of the Year New York State Association of Realtors

Manager White Plains Branch

Associate Broker

Better Homes&Gardens Rand Realty

One North Broadway, suite 120,

White Plains, NY 10601

914-328-0333