Home sales in 2021 increased by 8.5 percent from 2020.

Each time someone buys a home, they work through many steps before closing on it. A few days before closing on a house purchase, the buyer and seller receive a real estate closing statement.

What is this statement, and what information can you find on it?

Here is a guide to help you know what a real estate closing statement is, how to read it, and the information you’ll find on it.

Understanding Your South Carolina Real Estate Closing Statement

A real estate transaction, particularly the final act known as “closing” or “settlement,” is a complex culmination of agreements, negotiations, and financial transfers. At the heart of this intricate process in South Carolina lies the real estate closing statement – a pivotal document that distills all financial activity into a digestible summary for both buyer and seller. Far more than just a receipt, it serves as the official financial reconciliation of the entire deal, providing transparency and clarity regarding every dollar spent and received.

The Essence of the Closing Statement

Fundamentally, a real estate closing statement in South Carolina is a detailed accounting of all monies involved in the property transfer. It enumerates every cost, credit, and adjustment pertaining to the transaction, ensuring that both parties fully understand their financial obligations and benefits. Its primary function is to arrive at the precise “bottom line” – the exact amount the buyer must bring to the closing table and the exact net proceeds the seller will walk away with.

In South Carolina, it’s common for the closing firm, typically a law firm due to the state’s “attorney closing” requirement, to prepare this document. Depending on their internal practices or the complexity of the transaction, they may opt for a single, consolidated statement that outlines the finances for both buyer and seller side-by-side. 

Alternatively, they might generate two distinct statements: one specifically itemizing the buyer’s debits and credits, and another exclusively for the seller’s financial breakdown. Regardless of the format, the purpose remains identical: to provide a comprehensive and accurate record of financial flow. Reviewing this statement diligently is crucial, as it provides each party with a clear, line-by-line understanding of how their final financial obligations or receipts were calculated.

The concluding section of the statement is arguably the most anticipated part for both parties. For the buyer, it reveals the precise sum of funds they need to provide to finalize the purchase. For the seller, it specifies the exact amount of money they will receive from the sale after all expenses and payoffs are accounted for. This clear finality is what makes the closing statement such an indispensable document.

Decoding the Information: What You’ll Find on a Closing Statement

A typical real estate closing statement, while dense with figures and line items, is meticulously organized to categorize the various financial components. Let’s break down the main categories you’ll encounter:

The Costs for the Buyer: Debits and Deductions

The buyer’s section of the closing statement—or their dedicated statement—will meticulously detail every expense they incur in acquiring the home. While the most substantial cost is, naturally, the agreed-upon purchase price of the property, numerous other associated fees and charges contribute to the overall expenditure. These are typically listed as “debits,” indicating money owed by the buyer.

1. The Agreed-Upon Selling Price: This is the foundational debit, representing the negotiated cost of the property itself.
2. Lender Charges (Loan Origination Fees): If the buyer is financing the purchase, the lender will levy various fees for processing and underwriting the loan. These can include:
   • Loan Origination Fee: A percentage of the loan amount, charged by the lender for processing the mortgage application.
   • Discount Points: Fees paid upfront to the lender in exchange for a lower interest rate.
   • Underwriting Fee: Covers the cost of evaluating the loan application and borrower’s creditworthiness.
   • Processing Fee: For the administrative work involved in handling the loan.
   • Appraisal Fee: Paid to an independent appraiser to determine the property’s market value.
   • Credit Report Fee: For obtaining the buyer’s credit history.
   • Flood Certification Fee: To determine if the property is in a flood zone.
   • Tax Service Fee: Paid to a third-party service that monitors property tax payments to ensure they are current.
3. Prepaid Items & Escrow Setup: These are expenses the buyer pays at closing that cover periods after closing or are set aside for future recurring costs.
   • Prepaid Interest: Interest on the new loan from the closing date to the end of the month.
   • Property Taxes (Initial Escrow Deposit): Lenders often require an initial deposit into an escrow account to cover future property tax payments. This ensures funds are available when taxes are due.
   • Homeowner’s Insurance Premium: The first year’s premium is typically paid in full at closing, and an initial escrow deposit for future premiums is also common.
   • Mortgage Insurance (PMI/MIP): If applicable, a portion of the premium may be due at closing, along with an initial escrow deposit.
4. Third-Party Service Fees: These are charges for services essential to the transaction but not directly related to the lender or seller.
   • Home Inspection Fees: For a professional assessment of the property’s condition.
   • Pest Inspection Fee: To check for termites or other wood-destroying organisms.
   • Survey Fee: If a new property survey is required to verify boundary lines.
5. Title-Related Fees: In South Carolina, these fees are particularly prominent due to the attorney-led closing process.
   • Title Insurance Premiums: Often comprising two parts:
     • Lender’s Title Insurance: Protects the lender’s interest in the property.
     • Owner’s Title Insurance: Protects the buyer against defects in the title (highly recommended).
   • Title Search/Examination Fee: For researching the property’s history to ensure a clear title.
   • Closing/Settlement Fee (Attorney Fees): Paid to the closing attorney for coordinating the closing, preparing documents, and facilitating the transfer of funds. This is a significant cost in SC.
   • Recording Fees: Paid to the county to officially record the deed and mortgage.
6. Prorations (Buyer’s Share): While often a credit for taxes, if the buyer is taking over something prepaid by the seller (less common), they might have a small debit. For example, if the seller already paid HOA dues for the month of closing, the buyer would owe the seller for their portion.

The Credits for the Buyer: Reducing the Out-of-Pocket Expense

Just as the buyer has costs, they also receive “credits” that reduce the total amount of money they need to bring to closing. These are funds or adjustments that work in the buyer’s favor.

1. Earnest Money Deposit: This is the initial deposit the buyer made to show their serious intent to purchase the home. It’s held in an escrow account and then applied as a credit towards the purchase price at closing.
2. Down Payment: The significant portion of the purchase price that the buyer pays upfront, reducing the amount of the mortgage loan. This is a direct credit against the purchase price.
3. Loan Proceeds: The actual amount of money the lender is providing for the mortgage. This is a major credit that offsets the purchase price and other costs.
4. Prorated Property Taxes: This is a common and often substantial credit for the buyer. Property taxes are typically paid in arrears or for a specific tax year. If the seller has occupied the home for a portion of the current tax period, they are responsible for their share of the taxes up to the closing date. The buyer receives a credit for this amount, effectively reducing their closing costs, as they will be responsible for paying the full tax bill when it comes due.
5. Seller Concessions/Credits: Sometimes, as part of the negotiation, the seller agrees to pay a portion of the buyer’s closing costs or provide a credit for repairs. These negotiated amounts will appear as credits on the buyer’s statement.
6. Prorated HOA Dues/Other Dues: Similar to property taxes, if the seller has prepaid homeowner’s association dues beyond the closing date, the buyer will receive a credit for the unused portion.

The Costs for the Seller: Expenses of Selling

The seller’s side of the statement, while typically less extensive in terms of individual line items compared to the buyer’s, still outlines several significant expenses that reduce their net proceeds from the sale. These are also listed as debits.

1. Mortgage Payoff: This is often the largest single debit for the seller. If they have an existing mortgage on the property, the outstanding balance, including any interest accrued up to the closing date and potentially a prepayment penalty (though less common now), must be paid off at closing. This amount directly reduces the funds the seller receives.
2. Real Estate Commissions: The commissions paid to the real estate agents (both the seller’s agent and the buyer’s agent) are a primary expense for the seller. This is usually a percentage of the final sales price and can be a substantial sum. The commission is typically split between the two brokerages involved.
3. Prorated Property Taxes: From the seller’s perspective, they are debited for the property taxes owed for the period they owned the home up to the closing date. This is the flip side of the buyer’s credit for prorated taxes.
4. Transfer Taxes/Deed Stamps: In South Carolina, there is a deed recording fee (often referred to as deed stamps) that is usually the seller’s responsibility. This is calculated based on the sales price.
5. Attorney Fees (Seller’s Portion): The seller will incur legal fees for the attorney preparing the deed, handling the payoff, and overseeing their side of the closing.
6. Title Insurance (Seller’s Responsibility): While the buyer often pays for the lender’s and owner’s title insurance, the seller might be responsible for clearing previous title issues or providing certain title-related documents.
7. HOA Fees/Other Dues (Prorated): The seller is responsible for their share of any homeowner’s association dues, special assessments, or other recurring charges up to the closing date.
8. Seller Concessions: Any closing costs or repair credits that the seller agreed to pay on behalf of the buyer will appear as debits on the seller’s statement.
9. Home Warranty: If the seller agreed to purchase a home warranty for the buyer as part of the deal, the cost of this warranty will be debited from the seller’s proceeds.
10. Lien Payoffs: If there are any outstanding liens on the property (e.g., judgments, mechanic’s liens), these must be paid off at closing and will appear as debits.

The Credits for the Seller: Funds Received

The seller’s credits typically simplify to one primary source, though others can occasionally appear.

1. The Home’s Sales Price: This is the most significant credit for the seller, representing the total amount for which the property was sold. This is the starting point from which all seller costs are subtracted.
2. Prorated Prepaids (Less Common): In rare instances, if the seller had significantly prepaid certain expenses (like a full year of HOA dues) that extend far beyond the closing date, they might receive a small credit back from the buyer for the unused portion.

The Bottom Line: Final Figures and Financial Exchange

The “bottom line” is the summation of all the financial machinations detailed above, providing the ultimate figures for the actual money exchange at closing.

For the buyer, the closing statement’s final calculation involves adding up all the debits (costs) and then subtracting all the credits. The resulting figure is the precise amount of money the buyer must bring to the closing appointment. 

This amount typically needs to be in the form of a cashier’s check or a wire transfer, as personal checks are rarely accepted for such large sums to ensure funds are immediately available. The closing attorney’s office will provide detailed instructions on the acceptable payment methods and amounts well in advance.

For the seller, the calculation is essentially the reverse. The closing firm adds up all the credits the seller receives (primarily the sales price) and then subtracts all the seller’s associated costs and payoffs. The final number represents the net proceeds the seller will receive from the sale. This amount is usually disbursed to the seller via a direct wire transfer to their bank account or a check issued by the closing attorney’s office immediately after the closing is completed and all documents are recorded.

Therefore, the real estate closing statement serves as the definitive financial ledger for the transaction. It clearly illustrates to the buyer how much they need to contribute to complete the purchase, and it transparently shows the seller precisely how much they will gain after all their obligations and expenses are settled. 

Its accuracy and the detailed breakdown it provide are crucial for a smooth and legally sound transfer of property ownership in South Carolina. Buyers and sellers are strongly advised to review this document carefully, ideally with their real estate agent or attorney, prior to the closing date to clarify any questions and ensure all figures align with their understanding and agreements.

A Real Estate Closing Statement Is A Summary

The best way to explain a real estate closing statement is to know that it summarizes the financial details of a real estate deal.

In some cases, the firm handling the closing creates one statement that includes the information for the buyer and seller.

In other cases, they create two statements: one for the buyer’s information and the other for the seller’s information.

The closing statement summarizes all the money coming and going for the buyer and seller, and each party can read through it to see the transaction details.

The bottom of the statement shows the final amounts for the buyer and seller. It shows how much money the seller receives at closing and the amount of money the buyer must bring to the closing.

The Importance Of Reading It Before Attending The Appointment

Whether you’re buying a house or selling one, hiring a real estate attorney is an essential step you shouldn’t forego. Your attorney handles the closing work for you and ensures its accuracy.

You should receive a copy of the closing statement a few days before the scheduled appointment. When you get it, you should read it through line by line.

All the documents you sign at the closing come from the information on this one document. So if you find errors, you shouldn’t close on the deal until they fix them.

If you find mistakes, fixing them before closing is much simpler than fixing them afterward.

For example, suppose the statement doesn’t include the earnest money you paid when you wrote the offer. If this happens, you’ll pay more for the house than you should, as your earnest money reduces the amount you need.

Use A Real Estate Lawyer For Assistance

Learning about a real estate closing statement can help you prepare for buying or selling a home. Then, when you hire a real estate lawyer for help, you’ll have the legal protection and assistance you need for the sale.

If you need a real estate lawyer in Greenville, SC, contact us at De Bruin Law Firm. We can help you with any type of real estate sale!