The closing process happens when you finalize all the documents and paperwork necessary for buying real estate and all deeds are recorded and funds are dispersed. This closing can only happen when every notch falls into place and there are a lot of notches! So, there's a chance that something can fall through. You're dealing with a lot of involved parties when buying property, the title and escrow company, several real estate agents, buyers and sellers, appraisers, inspectors, and lenders. So, for everything to come together it can be challenging. And... you don't want to sabotage that sale. So here are 4 things that can ruin your closing.
#1. Insufficient closing funds.
Your lender should give you a good faith estimate as to exactly how much you'll be paying for the property in terms of closing costs, actual purchase price, down payment, and any other fees. If for some reason you don't bring the amount of closing costs needed to the table, the property cannot close. It's important to be preapproved for a loan before finalizing any closing documents. A buyer and a seller may need to cover some closing costs such as the title search, home inspection, or any prorated homeowner association dues or taxes. This can add up to several thousands of dollars to bring to the closing table and if for some reason either party does not have those funds, it can cause a major glitch in the closing process. Be sure to contact your lender and know exactly what you need to bring to the table at closing.
#2. Renters or tenants in the property.
If you lease your home while you are trying to sell it you now have other people involved. Let's go back to that list of people involved in the process and add another one, tenants. Make sure your lease agreement provides enough time for renters to move on before closing so that it's not an awkward eviction situation.
Most homeowners will have a home inspection completed before final closing but if you are unable to prove that your home is been treated for pests or do something seriously wrong with pests or pest damage, buyers may back out of the deal and ruin the closing situation. Many contracts are drafted with contingencies that allow the buyer to inspect the property before finalizing the sale. Make sure you have completed anything and everything on the home inspection report contingency before finalizing documents.
#4. Any additional liens on the property.
Before selling a property you have to be the sole owner of the property or the one allowed to sell the property and if you have any unpaid bills from delinquent property taxes, homeowners association dues, or even additional mortgages, it could put a major glitch on your closing. Title searches will make sure that any liens found in public records are completed before closing, but if things are found at the last minute, it could really terminate or at the very minimum, delay the closing process.
As a seller, and even as a buyer, finalizing these documents before being called in by escrow to sign is really the key to a smooth and stress-free closing. Good communication with your listing agent and the buyers lender can make sure that all of these loose ends are tied up so that you don't have a huge surprise at the closing table.
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