Have you been holding your breath ever since your home went under contract? Both buyers and sellers alike dread the escrow period, and for good reason. There’s a lot that could go wrong during this time that could completely devastate the transaction.
Trying to get millions of details to come together is no easy feat, which is why issues can come up at any time up until the day of closing. Though you may not be able to prevent problems from happening on the other party’s end, you should know the potential problems you face so you can try to avoid them at all costs.
Consider these seven deadly real estate sins that can delay closings and what you can do about them.
1. Title Issues
Sellers need a free and clear title to transfer to the new buyer, but if there’s a property lien or other debt in the way, you won’t be able to proceed with the sale.
Once the home goes under contract, the title company will do a title search to make sure there’s nothing clouding up your title. If they discover a lien or other issue, they will notify you so you can resolve the issue. Things like bankruptcies, contractor liens, or divorce could all pose problems to the home’s title.
In many cases, title issues are as simple as proving you’ve paid off a debt. The process is much like clearing up issues in a credit report. The key is to jump on these issues as soon as possible so they don’t interfere with the closing.
2. Buyer Financing Issues
When the buyer’s offer is accepted, they must get financing for the home. But if the lender rejects them for a mortgage, it could put their homeownership dreams in limbo.
More than a third of closing delays are caused by buyer financing issues. Ideally, you will get pre-approved for a mortgage to make the actual approval process more of a sure thing. Also, keep your discretionary spending in check. Just because you get pre-approval doesn’t mean the lender won’t change their mind before closing.
3. Surprises During the Walkthrough
A few days before closing, the buyer will do a final walkthrough of the home to ensure that it’s in the same condition as when they made the offer and verify the homeowner has made any repairs they agreed to.
If something is amiss during the walkthrough, the buyer may want to put off the closing until the home is brought up to par.
Typically, this process is just a formality. Delays aren’t common due to the walkthrough, but sellers can help avoid hold-ups by ensuring the home reflects everything that’s spelled out in the agreement.
4. Money Transfer Issues
Coming up with the money is just part of the financial trouble. You also need a plan to transfer that money to the seller. In many cases, the money will need to be wired to the title company or closing attorney (your real estate agent will guide you on this). This should be arranged prior to the day of closing, and with enough time for the transaction to clear.
Some banks may take up to three days to complete the transfer, while others may be able to do it sooner. Check with your lender to ensure you have enough time to make the money transfer and avoid closing delays.
5. Moving Miscommunications
Ideally, sellers will be out of the home prior to closing, but that’s not always the case. Buyers and sellers must agree on when the seller will be out of the home and when the buyer can start moving in.
This is a fairly common occurrence, and one that can be avoided with clear communication. If you’re using a professional moving company, the last thing you want to do is pay them to wait in the driveway because the seller isn’t quite moved out yet.
6. Document Errors
A wrong initial or misspelled word on the closing documents can bring the closing to a grinding halt. Every document must be perfect before the transaction can close.
The best practice is to request copies of the documents prior to closing. If you notice any errors, work with the attorney to resolve them so that the actual closing can continue as scheduled.
7. Unexpected Death
It doesn’t happen often, but it does happen: if either the buyer or the seller dies, what happens to the contract?
In most cases, the sale will still go on. A real estate contract is an executory contract, which will remain valid. If the buyer or seller dies, a representative will act in their place to complete the transaction unless the other party agrees to void the contract. If it’s just a few days before closing, the representative may request an extension to the closing.
Avoid Closing Disasters with the Right Real Estate Agent
Closing delays are frustrating to buyers and sellers alike. Both parties want to see the end of escrow so they can move on to the next chapter. One of the easiest ways to potentially avoid closing issues is to work with the right real estate agent that can help you set the right expectations from the start.
Clever Partner Agents are full-service, experienced real estate agents in their local markets that can provide expert guidance on closings at the buying or selling process at large. Your agent can not only help you understand the challenges you face at closing, but also guide you through the process to mitigate your risk of experiencing issues.