How do I read a HUD1 Settlement Statement as a seller?

A blank copy of a settlement statement can be found HERE.

A Settlement Statement also known as a HUD-1 is a standard form that serves as your final accounting of all of the costs that are associated with your home purchase or sale. This document is usually issued to you between 3 days to 1 hour prior to the closing

A HUD-1 settlement statement has many lines that pertain to both the buyer and seller. However in this case we wanted to break down how to read it as a seller with an explanation of important lines you will see on your Settlement Statement.

Contract Sales Price: This is the amount credited to the seller

Mortgage Payoff: The payoff amount that will be sent to the existing mortgage company (if the home still has a loan) and will include additional interest a few days beyond closing.

Title Insurance (Owners Policy): This is typically paid for by the seller, however the contract gives the option for either buyer or seller to pay. It provides a policy to the new owner to insure free and clear title to the property. Title insurance protects lenders and buyers from financial loss due to defects in a title to a property. The most common claims filed against a title are back taxes, liens, and conflicting wills.

Taxes Due for Previous Year: Prior year taxes are not due and payable until the next calendar year. Amounts due for any prior year taxes will be collected from the seller. Typically, any closings after June 15th should already have their taxes for the prior year paid.

Taxes for Current Year: Seller is charged their portion of the current year taxes from January 1st to the closing date. Usually this is based on either prior year taxes or most recent assessed value.

Brokerage Fee Commissions: Real Estate Commissions as per Listing Agreement This total is usually 6% when listing and selling a house through an agent 3% – Buyers Agent & 3% to listing agent.

Real Estate Closing Fee: Fee charged for title company to act as settlement agent for the closing. Typically split 50/50 between Seller and Buyer pursuant to the contract.

HOA Transfer Fee: This can be paid by Seller, Buyer or split pursuant to the contract. It is the fee charged by the management company to transfer names and/or to acquire the status letter.

HOA Dues: Any dues up to the day of closing are seller’s responsibility. Any prepaid dues will be credited back to seller.

Seller Concessions: Closing costs the sellers have agreed to pay on the buyer’s behalf. Sometimes this number is 0, it depends on the contract and what both parties has agreed to.

Hopefully this will give you a better understanding of the settlement statement as a seller. If you need any further explanation your title company is a great resource to reach out to.