Five Tips for a Successful Real Estate Closing

After interviewing several real estate agents, conducting multiple home showings, staging open houses, and negotiating potential offers, you have finally signed on the dotted line and put your property under contract.  The next step is to successfully get the property closed and the title legally transferred to the buyer.  The time period from when the property is placed under contract up to the date of closing can either go smoothly or it can be an adventure.  The following five tips should provide a roadmap to a successful closing, while keeping you informed of the process along the way.

1. Make Sure All Contract Deadlines are in Your Calendar

It may seem obvious to most people, but you would be surprised how many times I’m contacted by buyers and sellers with closings occurring on our office that have missed a contract deadline and are unaware of the consequences.  The deadlines within the contract are not only important to abide by, but they are also crucial to understand.  For example, in Florida, contracts for the sale of residential real estate allow for the buyer to have a ten to fifteen day “inspection period” or “due diligence period” that provides the buyer with the opportunity to conduct inspections of the property to see if it is worth purchasing.  Occasionally, inspections may reveal a faulty foundation or flood damage, which would typically cause a buyer to cancel the contract and receive a refund of the earnest money placed in escrow at the time the contract was signed.  However, if such a defect in the property was found, but the contract was not cancelled within the inspection period, the buyer would not be able to terminate the contract without sacrificing the earnest money to the seller.

There are multiple timelines within a real estate contract to be aware of.  These range from the above-referenced inspection period, the loan contingency period, the title review period, and the closing date.  The consequences for not performing during these periods could cost you money at the end of the day.  As such, be sure to have your realtor go through the contract once it’s been signed and have him or her identify these dates for you and what your responsibility is for each one.  Set reminders in your calendar so you know when deadlines are approaching so that you are not rushing to accomplish something last minute.  Staying ahead of these deadlines will keep you organized throughout the process.

2. Maintenance and Repair Responsibilities

Sellers of real estate would love for the sale of their property to be on an “as is” basis.  In other words, sellers would like nothing more than to set the price of the property and not have to do any repairs of any defects that are discovered by the buyer during the inspection period.  Unfortunately, that is not a realistic perspective in the residential resale market.  Sellers should anticipate having to make repairs to items in the property that are in disrepair, especially if those items are not simple cosmetic issues.  To get ahead of this, sellers should do a walkthrough inspection of their property before it goes under contract with their realtor to conduct an honest assessment of the physical condition of the property and identify areas of concern.  This will allow the seller to anticipate potential repair requests from the buyer as well as request bids for repairing the identified problem areas.

For buyers, it is important to review the inspection report in detail to see what parts of the property are in disrepair and need attention.  However, your realtor should be there to guide you through the inspection report so that the repair requests being made are not comprised of too many inconsequential items.  Buyers should also be cautious so as not to make requests that are solely cosmetic or would be considered as part of a future remodel or renovation.  Deals can quickly become adversarial over repair requests, so it is key that the requests be for material items, and that the buyer has a substantive inspection report backing up the need for the repair.

3. Title Issues

Any closing attorney will tell you the same thing as it relates to title defects:  the more notice there is to deal with the title issue, the smoother the closing will go.  In other words, if you are going to sell your property, and you know that there is a cloud on title (i.e., a mechanic’s lien, judgment lien, lis pendens, etc.), be upfront about it with your closing attorney.  Advance notice of a potential title discrepancy gives the closing attorney time to study the issue and attempt to work out a resolution.  Any title discrepancy is going to appear on the title commitment and will have to be resolved in order to for the title insurance policy to be issued.   Failing to disclose a potential problems will only lead to headaches at the closing table.

4. Anticipate Delays

It is important to recognize that there are many parties involved in a real estate transaction aside from the buyer and seller and their respective realtors.  There are lenders, surveyors, contractors (if repairs are required), lawyers for the buyer and the seller, homeowner’s association management companies, and others that all have tasks to perform to successfully close a transaction.  As such, it is important to know what services need to be engaged and when to make sure that the closing deliverable is provided on time.  As an example, if you know a new survey is required, and surveys are taking three weeks to complete, it would make sense to order the survey as soon as practicably possible.  Lenders also have the extremely important role of providing the loan for the buyer’s mortgage (if required).  If a lender is making requests from the buyer in order to obtain loan approval, it is incumbent on the buyer to diligently respond to these requests and provide the information requested.  That said, delays can happen, and the parties need to be able to be flexible in the event not everything is ready to go for closing.

5. Be Proactive

This final tip can be used to sum up this entire blog.  Buyers and sellers cannot sit around and think that the closing will occur without putting in any effort.  Closings do not happen without a coordinated effort from all parties.  You want to make sure you’re selected the right attorney to handle your transaction, but you also need to be proactive when requests are made.  Sellers often have to provide specific information to the closing attorney’s office so loan payoff requests and HOA estoppels can be ordered.  The sooner this information is provided, the less scrambling will have to be done in the days (god forbid hours) before closing.  Buyers often have to be more diligent throughout the process, especially when a loan is involved.  That said, taking a proactive approach from the outset of the transaction will set you up for success at the closing table.

Conclusion 

Closings may seem routine from the outside looking in, but they are far from it.  Each transaction has its own complexities that must be dealt with and handled with care.  It is crucial that you select a qualified closing agent to guide you through this process so that everyone can walk away from closing satisfied with a job well done.