Closing a home sale may seem guaranteed once an offer to purchase has been made and accepted, but there is a lot to consider for both Buyers and Sellers, and deals can collapse at the eleventh hour. Here are some steps and tips to remember to help Buyers close the deal successfully…and safely.
The mortgage crisis has taught many that one needs to be aware of the details of agreement when financing a house with a mortgage. Buyers should ask these questions:
- How will the taxes and insurance be paid?
- Will there be a pre-payment penalty?
- What is the interest rate on the loan?
- Are you going for a fixed or adjustable rate (OUCH!) mortgage?
- Up to what percentage of the property value will the bank finance? How will you finance the remainder?
- Be careful of Private Mortgage Insuance (PMI). Ask your Mortgage Broker.
- What are the closing costs and their amounts? These can occasionally be negotiated, and are sometimes paid in part or in full by motivated sellers.
Get appraised and surveyed
Hire a full service Home Inspection Company to do a complete examination of the property if the bank doesn’t—and they usually will. Make sure that you have a true picture of the property’s value from a professional. Their job is to find out what is wrong with the property so it can be repaired. The results of this examination may save you additional money before the purchase occurs. The property should also be surveyed to check for encroachments.
Get a lead on home insurance
Start looking for an insurance company that will provide coverage for you after the purchase has occurred. Please note that if the property is beyond a certain age, the insurance companies may require a 4 point inspection. This is used to determine whether the property has been brought up to existing code for plumbing, roofing, electricity and mechanical (A/C and Heat).
Get a reliable title company
A title company facilitates the transaction to ensure that it is smooth, legal and that the Buyer, Seller and the financial institution are protected. Both Buyer and Seller should be confident that the title company is reliable, especially when the transaction is different from previous purchases. I have been burned many times by title companies that didn’t check for "Open Permits", liens, violations or that missed an existing mortgage during a Title Search. Get Title Insurance to protect you from mistakes made by them.
There are extra precautions one can take, particularly if the house is older. You may want to order a C.L.U.E Report that provides a 5 year history of insurance claims against the property. This will tell you the insurance history about the property, including incidence of flooding, fire and vandalism.
You may also consider hiring a Real Estate Attorney. The fee they charge may protect you from many things that may cost you much, much more later on.
South Florida residents can find a list of service providers, including attorneys and more info on C.L.U.E. reports, on my website: South Florida Service Providers.
Closing the deal
You are nearing the finishing line! All the documents, inspections, appraisals, searches and deposits have been made and an appointment is scheduled to sign the papers. If it is a sound deal and both parties are motivated everything can be negotiated and fixed. However, deals can and will blowup at the closing table, so don’t get sloppy now. You may want to read Ten Reasons Deals Fail at Closing by mortgage broker Joseph F. Suarez.
Last but not least, make sure the transaction is recorded properly. I have received a recorded deed with the wrong name in the past. Call your Title Company to correct the error and record it again.
You’re done! Now go enjoy the home that you have worked so hard for!