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March 17, 2007
No one ever gets this right
This was by far the worst class I have had so far at Real Estate School. I have become accustomed by now to all manner of ridiculous, and often humorous classroom situations. I’ve even been able to handle some the boring material rather well. Everything else paled in badness compared to today.
Class started normal enough, with the usual groans as the instructor warned that today would be another math course. I smiled to see the slide projector and tape player out like in Lesson 16. Our instructor began by warning us all: “Do not let anyone move into the home you have sold until closing. Settlement is when papers are signed, but it is NOT the same thing. Until funds close, you never know what could happen”
Surprisingly, after only a minute or two of slides and this brief warning about closing, our instructor eagerly announced that he would be leaving the classroom, and that we were to remain inside and work on a closing statement, which he beamed at us, “No one has EVER gotten right”
This was cleverly intended as a means of motivating the class into trying to be the first ones to fill out a closing statement correctly. As the instructor left the classroom, he mentioned softly that some of the required information was actually missing from the closing statement assignment.
I’ll try to scan the assignment so that everyone can see how ridiculous this thing was. It was essentially a blank table, with a confusing paragraph describing some of the information which we would need in order to fill out the closing statement, and leaving the rest to our imagination I suppose.
In case I haven’t mentioned it yet, a closing statement is a summary of all the closing costs involved with the final real estate transaction, and dividing the amounts spent between the buyer and the seller. They are detailed, long, and confusing. If you’ve bought a home before, you probably scanned it briefly and didn’t pay it more than 30 seconds attention.
It should be noted that it is incredibly easy for the title company preparing this statement to make a mistake or a typo which could easily have cost you several thousand dollars. For this reason, you may want to give it another look with a calculator.
Having taken an accounting course, there wasn’t much confusing about how a Closing statement is written. They are just a collection of items, which are either credited or debited. A credit is the thing given in exchange for a debit. An example of this would be a Credit Card Company crediting you $50, in exchange for a debit placed on your account stating you owe them $50. Simple stuff. I hoped to just ignore the problem, but sadly our instructor had assigned everyone a group, and mine had decided that we were going to finish the whole thing, and get it right. It was High School all over again :-p
One of my fellow group members asked another to borrow her calculator. She stared at it for a few minutes, then red with embarrassment, whispered “How do you turn these on?” We helped her press the on button, and she was ready to do math!
I’ll spare my readers the boring details of that next hour and a half. Suffice it to say, everyone gave up from frustration, and several picked up their copies of “Millionaire agent”, a get rich through real estate book.
This initiated a classroom discussion about whether the book could really make someone a millionaire, which soon led to some classmembers asking others if they had heard of the $1000 programs which teach a person how to pay off their mortgage early, or if anyone was going to attend that free real estate seminar that was coming to town. Several of the classmembers who had heard I was writing a book on Investment in real estate asked me to attend the free seminar with them to help them know if it was a scam or not. I told them it probably was, and to save themselves the time. In retrospect, I probably should have taken down their information, not to scam them of course…but at least I’d have some people to sell my book to!
Our instructor finally returned, and shared the answers to the incomplete problem. No one got it right.
Closing Problem - This was handed out to us with the challenge that no one ever gets it right. Spending five minutes trying to answer will show you why. This is probably worth reading over simply because it provides some genuine sample closing-related documents.
Real Estate Purchase and Sale Agreement - This was provided as extra information for the above problem. It created more questions than it answered.
Exclusive Sale And Listing Agreement - This is a dated listing agreement used by agents to list a property for a seller.
Closing Instructions Sheet - This is actually somewhat useful for double checking a closing statement to make sure everyone was charged the right fees.
Blank Closing Statement - Want to try doing a closing statement of you own? Knock yourself out.
read comments (1)
March 17th, 2007 at 11:39 pm
I want to know what the problem was. Did YOU try to answer it???