What is the purpose of a closing statement in a real estate transaction?

A closing statement serves a critical function in real estate transactions by detailing the allocation of expenses and receipts between the buyer and seller. This document outlines all financial aspects of the transaction, including closing costs, prorated taxes, and any applicable credits or debits, ensuring transparency and clarity for both parties involved.

A well-prepared closing statement helps both the buyer and seller understand their financial obligations, verify correct amounts, and confirm that all agreed-upon terms related to the financial transaction are met. It effectively summarizes the total funds involved, what each party is responsible for, and helps facilitate the transfer of ownership by making sure that all financial issues are settled before the deal is finalized.

Other options, such as finalizing the selling price, negotiating remaining terms of sale, or drafting the final deed, address different aspects that occur during a transaction but do not encompass the primary role of the closing statement, which focuses specifically on financial allocations.