Closing customs differ from place to place

Q: My friends are buying a property in a different state. Both parties are finally ready for closing. It is scheduled for next week, the day after final walk-through.

They are paying cash. They were planning to bring a cashier’s check to the closing, after the walk-through proves satisfactory. There is a branch of their bank in the new town, so they felt confident they could transfer funds this way.

Instead, their attorney instructed them to wire the full amount plus an additional sum (an estimate for credits to the seller) to their firm’s account now. They were told that if some funds remain, they will receive those via check from the firm.

My friends feel uneasy wiring all the money before they come to town, in case something happens. What is the appropriate way to transfer funds at closing when buyers pay cash? — O.

A: It’s understandable that your out-of-state friends are concerned, because closing customs vary so widely from one area to another.

When I was an active broker, in my town, buyers used to bring a certified check made out to themselves and sign it over at some point during the closing. But in this case, I thought I’d better check whether things have changed, so I contacted a local lawyer, who said:

“Wiring funds to the buyers’ attorney trust account before the closing is fairly routine here. One problem with checks — even certified or cashier’s checks — is that after being deposited into the attorney’s trust account, the funds cannot be withdrawn for one or more days to use for the closing.”

Your friends can follow local procedures. Assume there are precautions in place to protect buyers.

Q: This is actually a comment on a reader’s question about using a professional appraiser or relying on Realtors’ suggestions to estimate the value of one’s home. I have found a way that has been quite accurate and worked for me for over 30 years. (And, no, I am not a Realtor.) Here is the system:

1. Obtain the closing values and most recent taxes of the last sold homes in your vicinity. (The larger the number sold and the more recent the data, the more reliable this estimate will be.) The homes do not need to be “comparables,” as you will soon see. These numbers are now public information and can come from the county office or an online real estate site such as zillow.com.

2. Compute the ratio of average closing values to average taxes.

3. Multiply this ratio by your most recent taxes. The result is a best estimate of the value of your home.

4. If you want to be more accurate, you can compute the standard deviations, which gives a range of possible values — narrow or broad.

This method assumes the tax assessor is at least as accurate as the market — probably a good assumption. It also acknowledges that any savvy potential buyer is going to look at the same data. — W. B.

A: The weak point in your calculations is the assumption that the tax assessor is at least as accurate as the market, which is not a given. In some locations, only one individual assessment is changed when there is a sale. Elsewhere, the whole area may be reassessed at an interval that may not keep up with the market.

No matter how professional and experienced the assessor, nothing matters as much as recent comparable sales.

The whole science of real estate appraisal — and there are even Ph.D.s in this field — can be summed up as: “Buyers make value.”