What is the purpose of reconciliation in real estate transactions?

The purpose of reconciliation in real estate transactions is to factor in debits and credits from the purchase price. This process involves reviewing and confirming the various financial components associated with the transaction, including any costs or adjustments that need to be made to ensure that the seller and buyer have an accurate and agreeable understanding of the ultimate financial settlement.

Reconciliation helps in providing clarity on the total amount due at closing by bringing together all relevant financial figures such as closing costs, deposit amounts, and any applicable adjustments for taxes or utilities. By accurately reconciling these figures, parties can prevent misunderstandings and ensure a smoother transaction.

In contrast, assessing property value before selling pertains to appraisals and market evaluations, which do not involve the detailed financial breakdown reconciliation entails. Finalizing mortgage approval is a separate phase that involves lenders assessing the buyer's financial qualification rather than the specifics of the transaction's financials. Negotiating terms with the seller relates to the discussions and agreements made prior to a contract being signed, not the financial reconciliation that occurs subsequently.