At a seller’s closing, you sign a small set of transfer documents in front of a notary, the closing agent subtracts your mortgage payoff and other costs from the sale price, and your net proceeds go out by wire or cashier’s check. The whole appointment usually runs 60 to 90 minutes. Understanding what happens at closing for sellers comes down to three things: what you sign, how the money breaks down, and when it actually lands in your account.
What You Bring and What You Sign
Bring a valid government-issued photo ID, either a driver’s license or passport, so the notary can verify your identity before you sign anything. If the name on your ID doesn’t match the name on the title because of a marriage or legal name change, bring the document that connects the two, such as a marriage certificate or court order.
You’ll also hand over every way the buyer can get into the property: house keys, garage door remotes, mailbox keys, gate openers, and access codes for smart locks, security systems, or community gates. If your contract required specific repairs, bring the receipts and lien waivers from the contractors. A missing lien waiver can stall closing because it leaves open the possibility that a contractor could file a lien against the property after the sale.
The seller’s paperwork is lighter than the buyer’s, but every page carries real legal weight.
- Deed. This is the main event. The deed legally transfers ownership from you to the buyer and must be signed in front of a notary. In a standard residential sale, this is almost always a warranty deed, meaning you’re guaranteeing that the title is clear and that no one else has a claim to the property. If someone later surfaces with a valid claim, you’re on the hook.
- Settlement statement. Sometimes called an ALTA statement, this is the seller’s financial accounting of the transaction. It shows the sale price, every deduction, and your net proceeds. Many sellers confuse this with the Closing Disclosure, but that form goes to the buyer and details their loan terms; it’s required under federal Regulation Z and must reach the buyer at least three business days before closing. Your settlement statement is the document to review line by line.1eCFR. 12 CFR 1026.38 – Content of Disclosures for Certain Mortgage Transactions
- Affidavit of title. A sworn statement that you legally own the property, that no undisclosed liens or judgments exist against it, and that no one else has a right to claim ownership. Lying on this affidavit exposes you to legal liability well beyond the closing date.
- Bill of sale. If the deal includes personal property like appliances, window treatments, or a riding mower, this document transfers ownership of those items separately from the real estate itself.
- 1099-S certification. The closing agent is generally required to report the sale to the IRS on Form 1099-S. If the home was your primary residence and the sale price is $250,000 or less ($500,000 or less for married couples filing jointly), you can sign a certification stating the full gain is excludable, which exempts the transaction from 1099-S reporting.2Internal Revenue Service. Instructions for Form 1099-S – Proceeds From Real Estate Transactions
Depending on location and the specifics of the deal, you might also sign a compliance agreement (promising to sign additional corrective documents if a clerical error surfaces later), a non-foreign seller affidavit under FIRPTA, or transfer tax declarations.
Where Your Money Goes
The settlement statement starts with your gross sale price at the top and subtracts every cost until you reach the net proceeds at the bottom.
Mortgage Payoff
This is usually the largest deduction. Your lender provides a payoff letter to the closing agent showing the remaining principal balance plus interest accrued through the day of closing. If you have a home equity loan or line of credit, that gets paid off separately. The closing agent wires these amounts directly to the lender, so you never touch that money.
Agent Commissions
Since the NAR practice changes that took effect in August 2024, offers of compensation to buyer’s agents can no longer be listed on the MLS, though sellers can still agree to pay the buyer’s agent commission through off-MLS negotiation.3National Association of REALTORS®. National Association of Realtors Provides Final Reminder of NAR Practice Change Implementation In practice, many sellers still cover both sides to attract offers, and survey data for 2026 puts the average total commission around 5.7%, split roughly evenly between the listing and buyer’s agents. Whatever you agreed to in your listing agreement and the purchase contract is what appears on your settlement statement.
Title Insurance, Taxes, and Fees
The remaining deductions are smaller individually but add up fast:
- Owner’s title insurance. In many markets, the seller pays for the buyer’s title insurance policy, which protects the buyer if a title defect surfaces after closing. This is a one-time premium based on the sale price.
- Prorated property taxes. You pay for the portion of the tax year you owned the home. If you close on March 15 and taxes are due annually, you owe roughly 20% of the annual bill. The closing agent calculates this to the day.
- Transfer taxes. These vary wildly by location. Some states and municipalities charge nothing; others impose rates that can reach several dollars per thousand of the sale price.
- Recording fees. The county recorder charges a fee to officially file the new deed. Nationally these tend to average around $125, though costs vary by county.
- Attorney or closing fees. Roughly a dozen states require an attorney to conduct the closing. Whether you’re in an attorney state or an escrow state, someone is coordinating the transaction, and their fee shows up here.
- Seller credits or concessions. If you agreed to credit the buyer for repairs or closing costs during negotiations, that amount is subtracted from your proceeds. The net effect to you is the same whether you gave a credit or reduced the sale price, though credits can carry limits based on the buyer’s loan type.
- Home warranty. If you agreed to provide the buyer with a home warranty, the one-year premium is deducted at closing, typically costing between $350 and $900.
When You Actually Get Paid
Once every document is signed and the closing agent confirms that all funds are accounted for, the money moves. You’ll choose your payment method a few days before closing, almost always a wire transfer or a cashier’s check.
Wire transfers are the overwhelming favorite because the money goes directly into your bank account, usually the same business day if the closing wraps up before the mid-afternoon cutoff. Close later in the day or on a Friday, and you might not see the deposit until the next business day. A cashier’s check puts funds in your hands immediately at the table, but you still need to deposit it.
One important timing variable: about nine states, including California, Arizona, and Washington, use “dry funding,” meaning documents are signed first and funds aren’t disbursed until all paperwork clears, sometimes a day or two later. In the remaining “wet funding” states, money changes hands on the day of signing or within a day or two after.
After the funds are distributed, you hand over the keys and the closing agent takes the signed deed to the county recorder’s office. Recording the deed makes the transfer public record and prevents any conflicting ownership claims. Once it’s done, the property is no longer yours in any legal sense.
Protecting Your Proceeds From Wire Fraud
Real estate wire fraud is not a hypothetical risk. The FBI’s Internet Crime Complaint Center logged over 9,300 complaints tied to real estate fraud in 2024, with losses exceeding $173 million.4FBI Internet Crime Complaint Center. 2024 IC3 Annual Report The typical scheme involves a hacker intercepting email between you and the closing agent, then sending spoofed wiring instructions that route your proceeds to the criminal’s account.
Get your wiring instructions directly from the closing agent in person, or confirm them by calling a phone number you’ve independently verified rather than a number from an email. Be deeply suspicious of any last-minute changes to wiring details, especially those arriving by email. Title companies and closing agents don’t suddenly change their bank accounts the day before closing. After you provide your bank details for receiving funds, call to confirm the wire was sent and received using a number you trust. If something feels off, pause and verify before anyone moves money.
Taxes After the Sale
Selling a home triggers federal tax reporting obligations, though many sellers owe nothing thanks to the primary-residence exclusion.
The Section 121 Exclusion
If you owned and lived in the home as your primary residence for at least two of the five years before the sale, you can exclude up to $250,000 of capital gain from your income. Married couples filing jointly can exclude up to $500,000.5Internal Revenue Service. Topic No. 701, Sale of Your Home “Capital gain” here means the difference between your adjusted cost basis (what you paid plus qualifying improvements) and the sale price, not the gross proceeds. If your gain falls within these limits, you likely won’t owe federal capital gains tax on the sale, and you may not even receive a 1099-S if you sign the certification at closing.2Internal Revenue Service. Instructions for Form 1099-S – Proceeds From Real Estate Transactions
When You Will Owe
If your gain exceeds the exclusion limit, or if the home was an investment property or second home that doesn’t qualify, the profit is taxable as a capital gain. You’ll receive Form 1099-S reporting the gross proceeds, and you’ll report the sale on your federal return. Keep your settlement statement, records of capital improvements, and any documents showing your purchase price. You’ll need them to calculate your actual gain accurately.
Foreign Sellers and FIRPTA
If you’re not a U.S. citizen or resident alien, the buyer is required to withhold 15% of the sale price under the Foreign Investment in Real Property Tax Act and remit it to the IRS.6Internal Revenue Service. FIRPTA Withholding This isn’t a tax; it’s a prepayment toward whatever tax you owe. If you overpay, you can file a U.S. tax return to claim a refund. The withholding is deducted at closing, which means your net proceeds will be significantly lower than a domestic seller would receive on the same sale. If you’re a foreign seller, working with a tax professional before listing is worth the cost.
If You Can’t Be There in Person
If you’ve relocated, are deployed, or simply can’t be in the room, you have options.
Power of Attorney
You can grant someone a power of attorney to sign closing documents on your behalf. Most title companies and lenders require a specific or “special” power of attorney that names the exact property being sold and the actions the agent can take. A general power of attorney usually won’t be accepted. The POA must be signed and notarized before closing, and the title company will likely want to verify by phone that you’re alive and still intend the sale to proceed. Submit the POA to the closing agent well in advance so they can review it with the title insurer.
Remote Online Notarization
Nearly every state now permits remote online notarization, where you sign documents and interact with a notary over a live video connection. The notary verifies your identity through knowledge-based authentication questions and reviews your ID on camera. Not every title company or lender supports RON yet, so confirm availability early in the process.
Mail-Away Closing
In a mail-away closing, the closing agent sends your documents by overnight delivery. You sign them in front of a local notary and send them back. This works but adds a few days to the timeline and requires you to find a notary wherever you are. Some sellers combine a mail-away signing for most documents with a brief video call to handle any last-minute issues.
What You’re Still on the Hook For
Signing the deed and cashing the check doesn’t eliminate every obligation tied to the property.
Disclosure Liability
If the buyer discovers a material defect you knew about and didn’t disclose, you can face a lawsuit for nondisclosure or misrepresentation even after closing. State disclosure laws vary, but the core principle is consistent: sellers must reveal known material defects that a buyer wouldn’t easily spot on their own. “I didn’t know” is a defense; “I should have known” may or may not be, depending on your state’s legal standard. Err on the side of over-disclosing before closing, because defending a nondisclosure claim after the fact is expensive regardless of who wins.
Post-Closing Occupancy
If you negotiated a post-closing occupancy agreement to stay in the home after closing, often while waiting for your next home to be ready, you’re effectively a tenant in the buyer’s property. These agreements specify the length of your stay, any daily rent, and an escrow holdback from your proceeds to protect the buyer if you overstay or cause damage. Treat them seriously. Overstaying creates legal exposure and can cost you the full holdback amount.
Records to Keep
Hold onto copies of your settlement statement, the deed, and all closing documents. The settlement statement is essential for tax filing, especially if you need to prove your cost basis or demonstrate that certain costs were paid. The IRS recommends keeping these records for at least three years after filing the return that reports the sale, though keeping them longer is practical if you plan to use the Section 121 exclusion again on a future home.