What is essential for a closing statement to reflect accurate financial transactions?

A closing statement serves as a comprehensive summary of the financial aspects of a real estate transaction between the buyer and seller. For it to accurately reflect financial transactions, it is crucial that all credits and debits are totaled correctly. This means that every amount of money that is credited to either party (like loan amounts, earnest money deposits, or seller concessions) and every debit (such as purchase price, closing costs, or taxes) must be meticulously calculated and presented.

If the totals are incorrect, it could lead to misunderstandings between the parties involved, potential disputes, and even legal issues if the numbers do not align with the agreed-upon terms of the transaction. Accurate calculations ensure that both the buyer and seller clearly understand their financial obligations and entitlements upon closing the deal.

In contrast, focusing only on the buyer's payments or the seller's expenses does not give a full picture of the transaction and ignores the mutual financial responsibilities involved in a property sale. Additionally, excluding fees from the statement would not comply with standard practices, which require transparency regarding all costs associated with the transaction. Totaling all credits and debits accurately is thus fundamental to a well-prepared closing statement.