Now that you are starting to field offers, you can see the light at the end of the tunnel. Offers become agreements, agreements become contracts, and contracts become closings. Most transactions go from offer-and-acceptance through to closing smoothly:
1. The parties reach an accepted offer.
2. The buyer completes a home inspection, and has no major issues.
3. Seller’s attorney drafts contracts, and the buyer’s attorney reviews them.
4. The buyer and seller sign contracts.
5. The buyer orders a title and municipal search.
6. The buyer pursues a mortgage loan application.
7. The title report comes back, and determines that the seller’s title is insurable.
8. The buyer gets a mortgage commitment from the lender.
9. The buyer performs a walkthrough of the property.
10. Finally, everyone meets in a conference room, a bunch of documents get signed, the buyer gets a home, and the seller gets a check.
That’s most of the time. Sometimes, though, bad things happen that can delay the closing of your transaction for days, weeks, or even months. A severe delay is not common, but it does happen. In many cases, delays are unavoidable, and you just have to persevere through whatever difficulties you have to get to a closing. In other cases, though, delays are caused by a lack of preparation and planning ahead, which you really should start doing at the time you start getting reasonable offers.
As always, we believe that you should be proactive in your selling process, preparing and protecting yourself from problems that can come up in the transaction. To give you some idea of what might unnecessarily delay your closing, and what you can do about them right now to protect yourself, here is an overview:
1. Hire an experienced local real estate attorney as soon as you can.
Most people wait until they have an accepted offer to hire an attorney. Unfortunately, that can often delay your getting into contract, even to the point of risking the buyer finding another opportunity and backing out of your deal. Drafting a real estate contract, which is the seller’s attorney’s role, does not take very long, but the simple acts of finding the right attorney, scheduling a meeting, and completing a consultation so that the attorney knows what you need can cause you days or even weeks.
Accordingly, we recommend that you hire an experienced real estate attorney as soon as you can. You’re going to have to hire and pay an attorney sometime, you might as well do it while neither of you are in a rush. That way, when you do get your accepted offer and finish inspections, the contract can be in the buyer’s attorney’s office that same day.
2. Insist on buyers getting pre-approved by a reputable lender.
Let’s say you get into contract, the title clears, and now you’re just waiting for the borrower to get his loan. Then you find out that the buyer is having trouble, and weeks go by while the loan winds its way through interminable processing and underwriting delays. This could definitely delay your closing.
Sometimes, no one could have foreseen the issue. Perhaps rates jumped and now the buyer needs to come up with more of a down payment. Or maybe a credit problem emerged, or someone lost a job. These things happen.
But other times, you could have avoided these kinds of delays by being more demanding of information from the buyer at the time you reached an agreement. Maybe these delays are caused because the buyer really was not qualified for the amount of money needed to buy your home, but no one knew that at the time you signed contracts. You could lose months because of this.
Accordingly, we counsel you, as we counsel all our agents, to always insist that buyers presenting offers provide a pre-approval letter from a reputable lender. A pre-approval letter is not the same thing as a commitment, and the lender is not doing much more than a superficial review of the buyer’s qualifications to purchase homes at a certain amount. It’s not a guarantee. But it’s definitely better than nothing, and it’s better than a pre-approval from some lender you’ve never heard of who hands pre-approvals out like free samples at Costco.
3. Consider ordering precautionary title and inspection reports.
The buyer is usually the party who orders title reports and inspections. The buyer needs a title report in order to obtain title insurance, and most buyers insist on a home inspection to ensure that the property does not have any serious defects. But even though you’re not required to get a title or inspection report, and even though these reports will cost you some out-of-pocket money, the peace of mind you can get, and the delays you can avoid, might be worth it.
Getting an early title report means that you will be aware of any problems with your title or your municipal search — such as an unresolved mechanic’s lien or a open building permit — with more than enough time to resolve those issues. And getting an early inspection report means that you can address issues that the buyer was going to find anyway later in the process, at a time when buyers often get cold feet.
If you’re interested in getting out ahead of some of the problems that can delay your home selling process, just talk to your agent about hiring an attorney, ensuring pre-approvals, and ordering title and inspection reports.