How to Read a Settlement Statement When Selling a Home
A settlement statement is an itemized list of fees and credits in a real estate transaction. Find out how to read one.
It’s the moment when you can’t bear to see another piece of paper related to your home sale that you’ll receive the settlement statement — also known as a closing statement in real estate. Muster up the energy to go over it with fresh eyes. This line-by-line guide detailing how to read a settlement statement should help.
Plus, the dense document will reveal an exciting calculation: how much you’ll pocket from this sale at the end of the day, after accounting for fees, taxes, and other charges. Sellers can expect to pay between 6%-10% of the final sale price in commissions and closing costs, so it’s nice to see exactly where that money is going.
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What is a settlement statement?
A settlement statement is an itemized list of fees and credits summarizing the finances of an entire real estate transaction. It serves as a record showing how all the money has changed hands line by line.
It details the funds owed to real estate agents collecting commission from the sale, local governments owed taxes and recording fees, and final charges going to the lender.
At the bottom of the statement, you’ll see your net proceeds in the seller credit column, as well as what’s due from the buyer. Think of this document as a formal receipt for your home sale.
Does the seller get a closing statement?
Buyers tend to sign the bulk of the paperwork at closing, making some sellers wonder if they will even receive a settlement statement.
However, this is one document that holds relevance among all parties to the transaction. Both seller and buyer will receive a copy of the settlement statement at closing to review.
Who prepares the settlement statement?
Whoever is facilitating the closing — whether it be a title company, escrow firm, or real estate attorney — will be responsible for preparing the settlement statement.
What is the settlement statement called now?
The settlement statement is called just that: a settlement statement. Different versions of these documents are used from state to state. However, the settlement form developed by the trade group ALTA (American Land Title Association) is widely used across the nation for real estate transactions.
To clear up any confusion, the settlement statement you’ll receive is not an HUD-1. As of October 3, 2015, the Closing Disclosure has replaced the HUD-1 Settlement Statement and Truth-in-Lending Statement, combining them into one document.
