4 Common Real Estate Closing Headaches…And How To Easily Avoid Them!
As closing agents, our job is to help buyers, sellers, lenders and real estate agents seamlessly consummate their transactions. We take great pride in taking the guesswork and hassle out of a successful real estate closing. And our most effective strategy in doing that is to be proactive in helping our clients on the front end set themselves up for success at the closing table. Today, we’re going to pull back the curtain and highlight four common headaches we see when it comes to real estate closings and…most importantly…how to avoid them!
- Missed Deadlines
In real estate, as with most things in life, TIMING is everything. There are always issues to resolve related to a closing. The good news is that almost every single one of them can be solved, IF it’s raised in a timely manner. Many times parties either ignore, or are unaware of, the timing deadlines found in their contracts and loan documents. And when deadlines are missed to raise issues, things that were previously easily resolved can become major showstoppers. Don’t let this happen! Map out all of the major deadlines in your documents and make sure all parties are explicitly aware. Then, be sure that all due diligence can be properly conducted and reviewed in the allowed timeframe. Lastly, ensure your title company is proactively working the timelines, not merely reactively responding.
- Repair Misunderstandings
Buyer: “I said replace the toilets.”
Seller: “Exactly, I fixed the 2 leaky faucets just like you said.”
Buyer: “Wait, what?”
Not only is timing important in raising issues, but CLARITY with regard to required REPAIRS is crucial. If you’re buying or selling a home that needs repairs completed prior to closing, you’ll want to be painfully explicit about several things: when and who will determine what needs to be repaired; who will complete the repairs; who will inspect the repairs; how much will be spent; and what happens if the repairs are not complete by the closing date. Detailing these exact expectations will eliminate a substantial amount of high blood pressure, hurt feelings, lost money and years off your life when closing finally arrives.
- Earnest Money Disputes
Many times the title company finds itself holding FUNDS POST-CLOSING in an escrow agreement awaiting one of the parties to complete some task related to the closing. It’s imperative that the trigger to release the funds is detailed and objective. For example, you’d much rather say that funds will be released when the county (an independent third party) issues a certificate of occupancy (a verifiable document) than state funds will be released when the buyer/seller deems the structure complete. In the end, you want the release of funds to be an obvious foregone conclusion that the parties merely document has occurred, rather than a protracted rehashing of what was actually required.
- Scheduling Conflicts
When setting the CLOSING DATE in the contract or loan documents, plan ahead! Yes, even pull out the calendar and make sure you are actually available. Many times the other parties are amicable to moving a closing date later to accommodate your schedule, but you can’t count on it! They don’t have to. And you don’t want to rely on a favor from people you likely don’t know to avoid default under the contract. In planning, you’ll help yourself to avoid times you know you will be traveling, bank holidays, late Friday afternoons when payoffs are involved and the last day of the month when a new loan is being issued.
Certainly, there are many other pitfalls to avoid and opportunities to maximize in your next real estate deal. Bottom line, surround yourself with a great team that is committed to making your real estate transaction a success. There will most certainly be issues to address, but with planning, proactive communication and a competent group of professionals at your side, you’ll come out way ahead…and with a few less gray hairs!