As tax collector, I constantly get questions about real estate taxes from people who are buying or selling a house. In my 20s —some years ago — I bought my first house in Pittsburgh. When I signed the final paperwork at the escrow office to close, I did not read the entire contract. And I did not fully understand those parts that I did read, including the HUD-1, which had a lot of numbers relevant to both the seller and the buyer. When I asked the escrow officer to explain it, he did so quickly, and I still did not understand it all. I was young and trusting at the time, and the HUD-1 was standard, so I didn't want to create a scene.
I am now an older, wiser, and more experienced person who has bought and sold several properties. I realize now that I was a dimwit for allowing that first escrow officer to get away with giving such a quick answer. What I gained from this experience is the understanding that it is my responsibility to read every last word of all closing documents and to gain a firm understanding before agreeing to anything.
I have learned that I have the right to demand a copy of all legal documents that will have to be signed in advance of the actual settlement (escrow) date. You should be able to review those documents at least two to three days in advance. The HUD-1 is a form used by the settlement agent (also called the closing agent) to itemize all charges imposed upon a borrower and seller for a real estate transaction. It gives each party a complete list of incoming and outgoing funds. Fees associated with the transaction but that arepaid prior to closing are also included on the HUD-1. They are normally marked "POC (Paid Outside of Closing). Oftentimes, entries may still be added just a few hours before closing. Most buyers and sellers study the statement on their own, with their real estate agent, and again with the settlement agent. Remember, the more people who review the statement, the more likely it will be that errors are detected. Don't assume that the closing agent is always correct; mistakes can happen. Ask as many questions as necessary to help you understand all charges.
If you are planning to sell or buy a home, you should thoroughly review the HUD-1 form. One of the easiest ways to learn about the HUD-1 is to search for this topic online. There are a variety of professional articles explaining this process and providing instructions fo completing the form.
Remember, buying or selling a house may be the largest financial transaction you will make in your life, and understanding the transaction should be a priority for you. If you do not understand what a document is saying, then you should ask questions until you do. People “kick the tires” when purchasing a new or used car. You should give the legal documents on a real estate purchase a similar high level of attention.
