Closing day in real estate is supposed to be a time of excitement and new beginnings, marking the moment when buyers can start a new chapter in their lives and sellers can move on to their next adventure. However, it’s not uncommon for surprises to arise, causing stress and potentially delaying the process. Here, we’ll explore the most common closing day surprises and provide strategies for overcoming them, ensuring a smoother transition for all parties involved.
1. Left Behind Items
Scenario: Buyers walk through their soon-to-be new home only to find the sellers have left behind paint cans, trash, and personal items, sometimes as extreme as the sellers not being fully moved out.
Solution: Communication is key. Buyers should immediately contact their real estate agent, who can liaise with the seller’s agent to resolve the issue. Options may include a delay in closing until the items are removed or arranging for junk removal at the sellers’ expense. Including a clause in the purchase agreement about the condition of the home at turnover can provide legal leverage in these situations.
Items Left in a Shed
2. Missing Items
Scenario: The excitement of moving in dampens when buyers discover that fixtures or negotiated furniture are missing.
Solution: Again, clear communication through agents is vital. If items that are supposed to stay with the home are missing, it could be a breach of contract. Buyers may seek compensation or the return of the items. A thorough documentation of agreed-upon items to remain in the home, ideally listed in a contract, can prevent this issue.
3. Incomplete Repairs
Scenario: Buyers find that repairs negotiated after the home inspection were not completed.
Solution: Buyers should bring this to their agent’s attention immediately. Options include delaying closing until repairs are completed, receiving a credit from the sellers to cover repair costs, or holding funds in escrow until the work is done. Ensuring a reinspection of the property before closing can help avoid this surprise.
Damaged Wall
4. New Damage
Scenario: New damage to the property is discovered, which occurred after the initial inspection and agreement on repairs.
Solution: Document the damage and negotiate with the sellers for repairs or compensation. This might mean adjusting the closing cost or delaying closing for repairs to be made. Having a clause in the contract that covers the property’s condition at closing can be beneficial.
5. Title Issues
Scenario: A lien or claim against the property is revealed during the title search, complicating the closing process.
Solution: Resolving title issues can be complex and may require additional legal assistance. Solutions might include the seller paying off the lien before closing or resolving disputes with co-owners or relatives. The closing will likely need to be delayed if this is revealed too close to the closing day. Title insurance can provide buyers with protection against unforeseen claims and ordering the title search as soon as the Offer to Purchase is signed can help prevent a delay in closing if an issue is discovered.
A Woman Finding Out Her Closing is Postponed
6. Delayed Funds
Scenario: The necessary funds for closing are not received on time due to banking issues or incorrect wiring instructions.
Solution: To avoid this, buyers should confirm all wiring instructions directly with their bank and ensure transactions are initiated well ahead of the closing date. Some attorneys require the wiring to be done 3 days in advance. If a delay occurs, communication with all parties involved can help manage expectations and reschedule the closing if necessary.
7. Financing Falls Through
Scenario: Last-minute financial changes lead to the buyer no longer qualifying for their home loan.
Solution: Buyers should avoid any major financial changes during the home-buying process. The lender will do one final credit check before closing. If they find any changes, it could disqualify the buyers from their current approved loan. That would restart the loan process and could completely disqualify the buyer from purchasing the home they are under contract to purchase. It could also give the seller a reason to back out of the contract, even if the buyer could qualify for another loan.
A Man With a New Truck He Just Bought
Here are 10 things not to do when receiving financing for a home:
- Don’t change jobs, become self-employed, or quit your job.
- Don’t buy a car, truck, or van unless you plan to live in it.
- Don’t use credit cards excessively or let current accounts fall behind.
- Don’t spend money you have set aside for closing.
- Don’t omit debts or liabilities from your loan application.
- Don’t make large deposits without checking with your loan officer.
- Don’t change bank accounts.
- Don’t co-sign a loan for anyone.
- Don’t make any large purchases.
- Don’t apply for new credit or loans.
In conclusion, while surprises on closing day can be unsettling, preparation and proactive communication can mitigate most issues. Buyers and sellers alike should lean on their real estate agents and legal advisors to navigate these challenges, ensuring that the path to closing remains as smooth as possible. Remember, the goal is to reach a solution that allows the transaction to proceed to the satisfaction of all parties involved. With the right approach, even the most unexpected surprises can be overcome, paving the way for a successful real estate transaction.
7 Common Closing Day Surprises and How to Avoid Them
