How to best ensure your buyers can close on the purchase transaction
The sale of a home requires many small details to come together at once. Unfortunately, there are a number of things that can go wrong before the final signatures are made.
The National Association of Realtors found that 32% of closings are delayed. There are, however, a number of ways to ensure buyers can close on their purchase transaction on time.
Problem #1: Mortgage and financing fall through at the last minute
A buyer’s ability to finance a home may fall through before closing. An unexpected job loss, large purchase, or missing documents could all cast into doubt a buyer’s ability to afford a house. About one third of closing delays are due to buyer financing problems.
Solution: Work with pre-approved buyers and keep them up to date of the timeline
There isn’t much that can be done to prevent buyers from purchasing a new BMW the week before closing. However, the best solution is to work with buyers who are pre-approved – rather than simply pre-qualified. Pre-qualification is a simpler process during which a lender checks over a buyer’s overall financial picture; pre-approval is much more in-depth and involves an official mortgage application, credit check, and more.
In addition to working with pre-approved buyers, keep buyers in the loop about the timeline for closing. This can help them avoid buying all new furniture – and increasing their debt load – in the days leading up to closing.
Problem #2: Document errors
Closing day involves signing a mountain of paperwork in a short amount of time; there simply isn’t time to read every document line by line. Unfortunately, even something as minor as a misspelled middle name can throw a major wrench in the closing process.
Solution: Request documents in advance
To avoid document errors such as misspelled names, wrong addresses, or unanticipated fees, request documents before closing day. Any loan documents, the ALTA statement, and the CD can all be read in advance of closing. Worried about making a mistake? Hire a real estate attorney to read the fine print and help prevent delays.
Problem #3: Missing Closing Disclosure form
The Closing Disclosure, or CD, is a large document that outlines the exact terms of the buyer’s loan as well as any closing costs associated with the sale. The CD must be sent to the buyer by the title or closing company no later than three days before closing; if a closing is scheduled for Friday, the CD must to the buyers by Tuesday or closing will have to be rescheduled.
Solution: Both the buyer’s and seller’s agents should be consistently in touch with the title company.
This allows both agents to receive updates on and get a set date for when the CD is guaranteed to go out, ensuring that closing day does not need to be unnecessarily postponed.
In both real estate and sports, it ain’t over till it's over. Staying in communication with buyers and tracking documentation are just a few of the ways to ensure buyers can close on their purchase transaction on time.
by Author, May. 08, 2020