Home Buying 101 - Handling Adjustments at Closing

Closing adjustments are credits and debits made during a real estate closing to cover a variety of expenses. At some real estate closings, adjustments can be extensive. So make sure you have a good handle on them prior to closing day.

Tax Adjustments at Closing In most cases, the biggest adjustments made at real estate closings are tax adjustments. Tax adjustments occur when the buyer reimburses the seller for pre-paid taxes (property taxes paid that extend beyond the closing date).

Oil and Fuel Adjustments Other adjustments include oil or fuel. If the seller is going to request an adjustment for oil or other fuel at the property, they are required to get a reading done that shows how much oil is left in the tank and what the prevailing rate is on that particular day. The buyer will then pay the seller for the oil they are leaving behind (for the benefit of the buyer).

Damage Adjustments Some home buyers find that the house they are buying was damaged after they signed contracts. Maybe a window was broken, or a wall got damaged. During the final walk-through of the property, it's important to note such discrepancies so your real estate agent and/or lawyer can negotiate closing adjustments on your behalf.

Adjustments Add Up When combined, the adjustments mentioned above can add up to thousands of dollars. A closing is never complete until all the paperwork is finalized, so don't be surprised if these adjustments get reworked several times as new information is discovered and recalculations are made.

Bring Your Checkbook Chances are, you (as the buyer) will be writing checks at the closing. So you'll want to bring some blank checks for any adjustments or other fees that arise at closing. It's also a good idea to wait until all adjustments are finalized before you start writing checks.

Some buyers find that their real estate agent or attorney can handle all adjustments prior to the closing, so they are not calculated during the actual closing process. This is the ideal scenario, but you should still be prepared to write additional checks in case something was overlooked.

Conclusion Adjustments are part of every real estate closing, so they shouldn't come as a surprise. Stay informed during the home buying process, and ask plenty of questions to determine what adjustments you should expect. That way, you can plan accordingly and have sufficient funds to cover everything on closing day.

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About the Author Brandon Cornett is publisher of Home Buying Institute, the Internet's largest library of home buying advice. You can learn more about the real estate closing process at http://www.homebuyinginstitute.com

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