In real estate, it’s always tempting to count your chickens before they hatch. When you’re halfway toward closing on a house, or even three quarters of the way there, you almost start thinking of the buying process as a done deal. Then complications may begin to arise, and they could even compound on one another to bring the agreement to a halt.
As agents and professionals, it’s important to put steps in place to make the closing the easiest thing ever for a client. Choosing a house is a massive decision, and if you can make the clients’ acquisition easier, they’d be even happier to close the deal. Here, 14 members of Forbes Real Estate Council suggest key steps homebuyers can take to streamline the closing process so that there are fewer hiccups.
1. Read Everything Again And Again
Read everything. Read everything again. And again. Ask for closing statements so that you know exactly what the costs are. Obtain all of the required insurance for possession. Schedule your final walkthrough a few days before closing, not the day of or the day before. Bring a pad and a pen to make sure every item that you’ve identified is checked off. – Mike Shapiro, Mike S Shapiro
2. Review The Settlement Statement
Most homebuyers purchase a house three to five times in their life. Their No. 1 challenge is understanding the settlement statement (aka HUD-1). Loan docs are the last item on the closing list. The buyer goes to close and notices a mistake or an incorrect fee on the HUD-1. There is little they can do except swallow and pay. The lesson is to review the HUD-1 before going to the title company. – Stuart Gethner,Dobson Property Management, LLC
3. Pursue Title Insurance
A clear title for the potential homeowner is not just important; it is vital! While all other types of insurance protect you against future events, title insurance protects you from the past. It prevents someone from stepping in at the last hour, saying, “Hey, I have a mortgage on that house” or “There is a lien against it.” There could even be an unknown heir. You need a clear title at closing. – James Prendamano, Casandra Properties, Inc,
4. Mind Your Paperwork
Read the documents. Last minute delays at closing are often born of paperwork. Closing costs may come in higher than the original closing statement listed. The title company and bank may not be communicating well, or there may be those all important (and sometimes dreaded) adjustments. Make sure you are on the same page about property taxes and insurance costs/credits. If you’re in the Northeast, don’t forget the fuel oil. – Kristin Geenty, The Geenty Group, Realtors
5. Perform Your Walkthrough Early
Perform your walkthrough five days prior to closing so that there is enough time to address with the seller any outstanding issues from the repair request. Check in religiously with the lender to confirm that documents and funding are on time, answer any last-minute document requests super promptly. Sign the closing disclosure immediately upon receipt. Communication with escrow, title and lender is key. – Courtney Poulos, ACME Real Estate
6. Only Use The Verified Account
One of the biggest issues we see from the financing side is buyers moving money around at the last minute or bringing cash in from an account that is not the one they verified. This will delay a closing. Once you have funds verified for closing, leave the funds in that account and don’t move them. Make the deposit for the closing from the verified account and your closing will go smoothly! – Michael G. Branson, All Reverse Mortgage, Inc.
7. Get Pre-Inspections On The Property
If the disclosure package has an incomplete set of inspections, make sure to get pre-inspections on the property with inspectors that you trust before waiving your inspection contingency. Finding out about a large ticket problem with the house after contingency removal during or after escrow will either mean you overpaid for the property by a lot or that the deal might fall apart. – Deniz Kahramaner, Altasa
8. Maintain Dialogue With The Seller
For commercial closings, especially apartment properties, keep in mind that each property is unique, so not everything can be anticipated. For actual closings, use only a seasoned commercial real estate transaction attorney. Beyond the actual closing, try and maintain an open dialogue and relationship with the seller of the property so you can ask questions when the inevitable questions arise. – Lee Kiser, Kiser Group
9. Have Contingency Plans In Place
Expect the unexpected. The best way to prepare is to anticipate what can go wrong, and create appropriate contingency plans for each potential negative scenario. Know where your leverage lies. If you expect the worst, you won’t be caught flat footed or worse, held hostage via a last-minute re-trade by the other party. – Jonathan Keyser, Keyser
10. Detail All Contingency Deadlines
Make sure you have all your contingency deadlines detailed and reference them often. Take careful steps to ensure you do not miss any deadlines. The last thing you want is for your earnest money to be tied up or to risk losing all of the earnest money due to a miscalculation on your part. Avoid getting lost in the details as this may cause you to forget your big dates, i.e., inspection contingency removal. – Pam Scamardo, TPK Properties LLC
11. Mind Your Credit/Debt-To-Income Ratio
Do not do anything that may affect your credit or debt-to-income ratio. This may include buying a car, financing appliances or furniture, putting significant purchases on a credit card, etc. However, it also includes closing or increasing the limit on existing credit accounts and checking your credit report. – Catherine Kuo, Elite Homes | Christie’s International Real Estate
12. Keep In Touch With Your Lender
Check with your lender every day the last week of closing and ask probing questions to ensure they are getting your loan done in time. Make sure underwriting is completed and there are no outstanding conditions. Follow up on any underwriting conditions daily and get specific answers from your lender. Make sure the closing disclosure gets out the door three days prior to closing, per federal guidelines. – Nick Ron, House Buyers of America
13. Get Financial In Order
The final stage comes down to the financials. If you’re paying cash, check your steps and timing for wires. If you’re using financing, check with your lender that all the details have been provided and all the T’s are crossed. Make sure your boss is ready to provide final employment verification, check the closing disclosures and ensure funds are wired at the right time to the right place. – Jennifer Anderson, Anderson Coastal Group
14. Share Information With Relevant Parties
Make sure you share all details with your accountant, lawyer and banker in this order. This has been my experience over my years of buying and selling properties personally and professionally. Accountants protect your tax basis, lawyers keep you on the straight and narrow and bankers ensure you’re staying positively leveraged. – Charles Argianas, Argianas & Associates, Inc.