5 Things That Could Derail Your Home Closing
5 Things That Could Derail Your Home Closing
For home buyers and sellers alike, closing day is the light at the end of the (potentially long, winding, detour-laden) tunnel. But, even after the mortgage has been approved, the contingencies have cleared, and the moving trucks are rounding the corner, there’s still the potential for a glitch to send a sale careening off course. In fact, according to a 2015 survey by the National Association of Realtors, nearly a third of all closings are delayed — and in 6 percent of those deals, the problem is so significant that it causes the sale to fall through completely. So how do you avoid an issue which, at best, can postpone your closing or, at worst, lose you your dream home (or dream buyer)? Here’s what to watch out for.
The latest problem that’s plaguing real estate sales is a growing threat involving email hackers. Though it might seem far-fetched, Marie Campbell, an agent with Berkshire Hathaway Home Services in Chicago, says the problem is becoming so prevalent in the industry that it’s changing the way many real estate offices, including hers, do business. Here’s how it goes down: “A hacker gets into a realtor’s email and keeps tabs on the deals as they move toward the closing,” says Campbell, who explains that a lot of the details of modern real estate transactions are hammered out online. “Shortly before the closing, it’s typical for a buyer to receive an email from their realtor with wire transfer instructions for the balance due. When the hacker sees that this email has gone out, he’ll send out a follow-up from the agent advising the client to send it to a different bank with a different account number.” From there, it’s not hard to imagine what ensues. In fact, after a hacker intercepted nearly $100,000 during a transaction at Campbell’s office, she and her colleagues began advising their clients to accept wire transfer instructions from their realtor over the phone or in person; advice she suggests all buyers and sellers heed.
One word: Money. It’s the most common reason deals don’t close on time, and according to the National Association of Realtors survey, financing issues affect nearly 50 percent of all delayed transactions. “Problems surrounding the buyer’s mortgage — a dispute over a number or a debt that wasn’t disclosed — tend to be the most typical,” says Linda Levin, an agent with Jameson Sotheby’s International Realty in Chicago. To mitigate the risk of this happening, buyers should stay on top of the mortgage process, which means returning all necessary documentation promptly and confirming that every payment has cleared before closing day.
There can be hundreds of pages of contracts to review during a closing, and while many of them are standard, it’s important to know what you’re signing. The good news: You’ll get one of the most important documents, the closing disclosure, to review three days in advance of your close date. Once you get the document, go through it with a fine-tooth comb. The bad news: If you do happen to catch an error, it could delay your closing date. “Sometimes an attorney has lifted something from another contract or forgotten to add a credit or contingencies, so it’s important to make sure that anything out-of-the-ordinary or specific to your sale is reflected,” says Campbell.
While a positive relationship between buyer and seller can speed up the sale of a real estate deal, a negative one can slow it down significantly, says Levin. She recalls one closing in particular where the seller was forced to offer the buyer a last-minute credit over a hardwood floor discoloration noticed at the final walkthrough. “Neither side had felt good about the deal from the get-go, so it wasn’t surprising that there was an issue,” she says. While brokers can help their clients navigate the sometimes-tense waters of a real estate deal, Levin always advises her clients to show courtesy to the other side. “When I’m listing a house, I always tell the sellers to make sure the buyers feel good about the sale. It sounds like simple advice, but it can make a huge difference in closing on time,” she says. Her number one tip to both buyer and seller: Respond to emails and phone calls promptly. “It creates a sense of respect,” she says.
And then, of course, there are those unforeseen circumstances that even the best brokers could never anticipate. Real estate entrepreneur Sean Conlon, for example, founder of CONLON/Christie’s International Real Estate, was once forced to track a client down when he didn’t show for his own close. “It turns out he had been arrested for drug dealing,” says Conlon. “He had gotten bailed out, but I had to pick him up at the police station and pay him $300 to get him to come with me. He just wasn’t interested in going at that point — but to me, it was a really exciting deal. The building was right beside Wrigley Field!”
Before another ill-fated close, “We were doing the final walkthrough when the client went down into the basement and screamed — there were about three feet of water on the floor,” says Conlon. To make matters worse, “We had allowed them to move their furniture in before closing, and it was all ruined,” he says. “The developer wouldn’t return any of the calls, so we got them a hotel while we fixed everything.”
If the sale and purchase are happening in the same day, there’s even more potential for drama: “A few years ago I had a double close,” remembers Levin. “That morning, the client got a call that the moving company had gone on strike. If he didn’t get to the closing table to sell the home by a certain time that day, he was going to lose the other sale. We worked it out at the last minute, but I was literally about to go and help them move.”