Monday, September 19, 2011 / by Ira Miskin
At the end of the closing, there usually an air of relief. The sometimes long, occasionally arduous, usually emotional and too often stressful journey is complete. Getting to the closing table should not be a painful and chaotic experience, but all too often it is. This is the time when an effective professional Team can take the reins and guide the Buyer and Seller to a satisfying and happy conclusion. The guiding concept is “grace under fire.” When the inevitable but predictable “unforeseen” issues crop up, your Realtor and their Team should be prepared to mitigate even the thorniest issues and help everyone stay calm, focused and working towards the conclusion everyone desires: a pleasant and successful closing.
Remember that both the Buyer and the Seller want the same thing: to close on time with as little hassle and stress as possible. Here are the highlights of a closing procedure and the key participants in each step.
The Due Diligence period is a mutually agreed number of days, beginning most often the first day following Binding Agreement. During this period the Buyer has the right to inspect the property, and the obligation to complete the financing phase of their loan application process. Your Realtor should be able to recommend a number of seasoned professionals on their Team such as a Home Inspector, Termite and Pest Infestation Inspector, and any additional inspections the Buyer may feel necessary like Radon and air quality testing, mold and mildew inspections, additional electrical and plumbing and heat and air conditional system inspections and others as a property may require. The Seller should be prepared by their Realtor for the results of the inspections which will come in the form of an Amendment detailing the Buyer’s concerns and requests for the Seller to address those concerns to the Buyer’s satisfaction. As the Seller, your Realtor should suggest you have your home inspected prior to listing, and repair all the potentially problematic issues so that they do not become a problem during due diligence and inevitably lead to a request to make costly repairs under stress or even cause the sale price to be renegotiated. The better the condition of the home, the stronger the negotiating power the Seller has regarding sale price. This video will add some perspective to the home inspection process.
This also takes place during the Due Diligence period. The Buyer, the Buyer’s Loan Office and the Buyer’s Realtor all working together as a Team should be certain all the Buyer’s credit and job history documentation has been verified by the Lender’s underwriter so that once a bound Purchase and Sale Agreement is provided to the Lender, only an appraisal and the inevitable last minute minor verification documents will be required by the underwriter to complete loan approval. Also during this period the Buyer’s Loan Office will provide the Buyer with an updated Good Faith Estimate (GFE) detailing all the loan application fees and additional expenses such as the first year’s Hazard Insurance policy, appraisal fee, pre-paid expenses like 2 - 3 month’s escrowed funds for taxes and insurances and other important expenses the Buyer will be required to pay at Closing. Often a document indicating Lender loan approval is also required.
Preparation for Closing
With all inspections completed, repairs negotiated and completed, and loan approval received, the Closing Attorney will be ready to receive the Lender’s closing package for final document preparation for the Close. Prior to loan approval the Closing Attorney will have performed a title search to insure clear title to the property can be conveyed from the Seller to the Buyer, will have ordered title insurance (preferably for both the Buyer’s Lender and also for the Buyer) and will be checking the Agreements and subsequent Amendments to be sure the entire Agreement is correct and signed and dated by all parties to the transaction. Based on the terms as agreed from the Purchase and Sale Agreement and the terms and finances as enumerated in the Buyer’s Lender’s closing package, a Closing Statement also known as a HUD will be prepared and distributed to all parties before the closing to check for any possible errors that can be corrected prior to the Closing.
Now it’s time to close the transaction. There are a variety of ways it can be executed, but if all parties are together at the Closing Attorney’s office, document signing, the exchange of monies for the close and the “handing over of the keys” at the end of the close caps off weeks, and sometimes months of hard work.
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