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

The role of a closing statement in a real estate transaction primarily revolves around detailing all costs and credits involved in the transaction. This document is critical as it provides a transparent overview of the financial aspects that both the buyer and seller should be aware of before completing the sale.

The closing statement includes line items for various fees, such as loan origination fees, title insurance, property taxes, and any adjustments for prorated expenses. It ensures that both parties understand their financial obligations and entitlements. For example, buyers may need to see how much they will actually need to pay at closing, while sellers can review what they will ultimately receive from the transaction after all costs are accounted for.

The other options focus on different aspects of the real estate process. Authorizing the sale to the buyer is part of the purchase agreement and the negotiations prior to closing, while finalizing the purchase agreement is a separate step that occurs before reaching the closing stage. Providing maintenance instructions may be noted in the closing documents but is not a function of the closing statement itself. Thus, the closing statement's essential role is to provide a detailed account of the financial transactions occurring as part of the sale.