What is the purpose of a settlement statement in real estate?

The purpose of a settlement statement in real estate is to itemize and summarize the closing costs for both the buyer and seller. This document is critical at the closing of a property transaction, as it provides a detailed breakdown of all financial aspects involved in the sale.

The settlement statement ensures transparency, allowing both parties to see what costs they are responsible for, such as loan fees, title insurance, property taxes, and any adjustments for prepaid expenses. It helps to clarify how the final sale price of the property is allocated between the buyer and seller, detailing who is paying what and ensuring there are no surprises at the closing table. This clarity is essential for maintaining trust between both parties and ensuring a smooth closing process.

In the context of the other options, while loan approval details are important in the financing phase of a transaction, they do not pertain to a settlement statement. Similarly, the history of ownership is usually recorded in public property records and not included in a settlement statement, nor does a settlement statement list potential buyers for the property. Thus, the itemization and summarization of closing costs is the primary and most relevant function of a settlement statement.