Closing Transaction refers to final transaction / settlement within an accounting period or a contract.
Closing Transaction in Accounting
A closing transaction is the final financial settlements being made within the accounting period. In every financial record, at the end of each accounting period the company will close any transactions that are in existence. They close their revenue and expense accounts of that particular accounting period and begin the next circle entirely from the beginning.
Closing Transaction in Contracts
After the closing transaction is done the contract has been fulfilled and the two parties are not under any obligations regarding their contract.
Real Estate
The closing transaction plays a very important role in a real estate transaction. After the offer is formally accepted, the closing date is fixed. Only on the closing date, the buyer will obtain ownership to the property. It actually means the transfer of the property from the seller to the buyer according to the contract that they have made. The duration of time required to close a real estate transaction is termed as ESCROW. Also most real estate dealings are done using an agent and the important closing transactions are done through him. He is a third party who coordinates both the buyer and seller based on their sale and purchase agreements.
During the Closing transactions, the parties get together and they verify all the necessary documents and sign them, then the entire cash is settled including any earlier backlogs. Then the closing is officially declared and the property is handed over.
Closing transactions can be stressful during a time of buying a property. You are always worried that the other party will not be able to go ahead with the sale or be able to pay on the sale. Itβs best to take some solace in the fact that a lot of closing transactions are stressful and you can always seek advice from your Realtor or government information agency.
Closing transaction is the final payment done after which the deal or the transaction is said to be closed or over. In real estate its importance is increased because after the final payment the ownership of the land or the property is changed. So it requires a lot of paper work to be done before making the final deal. Both the parties involved are in a state of insecurity with the fear that either of them might cheat.
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