Definition: CLosing
A closing is the name used describe the accounting activity where a transaction is completed. A real-estate transaction includes something called "Escrow", which is basically just a fancy word for the formal activity of organizing all of the fees and payments involved in the deal.

This is usually begun by taking any "earnest money" that the buyer puts down into a special bank account called an escrow account. All this means is that the accountants now have a place to start and they can organize from that point forward all of the money being payed into the escrow account and balance it against all of the money that has to be paid out of escrow to the seller, and the county, and any other people who provided services related to the deal, such as a surveyor or appraiser.

During "escrow", the accountants at the escrow company gather checks and make out checks that will pay people for things like termite inspections and the recording fees that go to the county, and dozens of other things. Of course, it also includes money from the buyer's lender, and a check to the seller for his final profit on the sale.

Once that is all done and all the checks have been collected and written, and all of the necessary documents have been signed, the escrow company then closes the escrow account and the transaction is complete.
go to main site