‘I Closed On My Home Sale During the Coronavirus Crisis’

On April 27, 2020   /   Closing  
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By Kimberly Dawn Neumann

When Doreen Smith listed her house in Castle Rock, CO, in February, the coronavirus was on her radar, but didn’t seem like a serious problem at the time.

“COVID-19 was on my mind because I teach high school social studies, and we’d discuss it when talking about current events,” says Smith. “But I certainly didn’t think that this would be something to have to consider when selling my home.”

When Smith was about to list her home, she asked her real estate agent if she should be worried about selling because it was an election year. Her agent assured her that January 2020 had been a terrific month for home sales. So Smith decided to move ahead and put her house on the market on Feb. 27.

“It was supposed to be a gorgeous, sunny weekend, so we put the ‘For Sale’ sign in my yard on Wednesday to be ready for my home to hit the MLS on Thursday,” Smith recalls. “My agent immediately started getting calls, including one on Wednesday night. I had five showings on Thursday, and I got three offers Friday morning.”

Smith decided to sell to a couple who lived in California.

“When I took their offer, it came with the contingency that they must be able to sell their home in order to buy mine,” Smith says. “I accepted the contingency because their house was already under contract, through inspection, and had a closing date of March 23.”

So Smith planned to move out on that same day, and move in temporarily with her sister in nearby Littleton, CO, while shopping for a condo. (Both of her boys were out of the house, so she was downsizing.)

All went according to schedule at first. However, in the ensuing weeks as news (and cases) of COVID-19 swept the nation, Smith saw much of what she knew about her home closing change.

Here’s how she survived closing a home sale during this pandemic—and what she learned in the process.

Why the coronavirus can delay closings

On March 23—the day of her scheduled closing and move—Smith got a call from her agent telling her there was a potential snag.

“Around 9:10 a.m. I got a text from my real estate agent: ‘Hi! Are you home?’ I texted ‘Yes! Movers are here, hope this is still a go?’ with a nervous emoji. Two seconds later I got a call,” says Smith. “My buyer’s buyer in California had a tax issue with their property and needed some form from the IRS. The IRS said due to the coronavirus, they were delayed in response times, and were not able to get the letter in time for their scheduled Monday closing.”

This snafu led to Smith and her buyer amending their contract to extend the closing by two weeks, and making it official with an electronic signature. So now she was set to close on April 7, but still moving on March 23.

Although Smith’s move went smoothly, more paperwork delays caused her closing to hit another snag, bumping her closing date to April 10. But the paperwork was procured faster than planned, and the closing date moved again, to April 8.

“Apparently my buyers were really frustrated, as they were homeless and all of their stuff was on a moving truck with no house,” says Smith. “At this point I was just trying not to freak out.”

Inside a ‘drive-through’ closing

When closing day finally arrived on April 8, Smith braced for more changes—and they arrived right on schedule. For instance, while most home closings involve all parties gathering to sign paperwork, the coronavirus had upended this tradition, too.

“Because of the crisis, real estate agents were not supposed to attend closings in order to minimize exposure to all parties,” says Smith. Furthermore, “the governor of Colorado had also passed a law saying that virtual closings were acceptable at this time. But my lender, like many, said no way. Lenders were trying to be careful about who they loaned money to.”

So, rather than conduct a virtual closing, Smith ended up doing the next best thing: a “drive-through closing.” She was told to drive to the title company’s parking lot, then call the title agent inside, who popped out of her office building wearing a mask and walked toward Smith’s car.

Smith (who was wearing a bandana mask) cracked her car window to hand her ID to the title agent. After verifying Smith’s ID, the title agent handed Smith a clipboard with the paperwork and a blue pen in a plastic bag.

The title agent told Smith to take her time and sign the highlighted sections of the paperwork. If Smith had any questions, she was urged to call her real estate agent, who was also keeping an eye on her phone in case there were any issues.

“It took me about 10 minutes to sign everything,” Smith says. “Then the title agent came back and reviewed everything while I remained in my car, and while we chatted about how strange this all was. The agent admitted they’d only been doing ‘drive-through’ closings for a week. The reason the title company required someone to show up in person was they wanted the seller’s account information of where they’d wire the money delivered in person—I assume that’s to avoid mistakes for the transfer of such a large amount.”

Despite this strange setting, the money was immediately wired to Smith and her sale was finally finished.

Now settled in at her sister’s home, Smith is going to hold off on looking for a condo for now.

“I asked my real estate agent when we could start hunting; she said maybe June,” says Smith. “But I am getting my mortgage pre-approval paperwork completed this week, so I am ready to buy when we are up and running again.”

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Closing On a House: What Sellers Should Expect

On August 21, 2017   /   Closing  
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closing

By: Angela Colley

The good news: You’re almost home free (or free of your home in this case). You’ve accepted the buyer’s offer, the negotiations are finally winding down, and there is only one more little box to check: closing.

OK, so maybe it isn’t a little thing. And maybe you’re a little worried something is still going to go wrong. That’s why we’re here to help get you through closing without a hitch—or barely a hitch (hey, stuff happens).

Get the repairs done

First things first: You’ve got to get those repairs done. We get it—the last thing you want to do now is work on a house you are about to sell. But if you agreed to make repairs or improvements, don’t put them off until the last minute.

“Some sellers do try to get cute and wait until the day of closing, but they really should do all the repairs at least a week before closing,” says Joshua Jarvis, founder of Jarvis Team Realty in Duluth, GA. Getting things done ahead of time will give you plenty of wiggle room if something should still go wrong, or if the buyer finds a problem during the final walkthrough (more on that to come).

So check the approved offer, make a note of any repairs you and the buyer agreed on, and get to it—and don’t forget to cover yourself. Save receipts from items purchased and invoices from contractors, and take before and after photos of any work completed. You will have proof that repairs were completed on the off chance that the buyers contest them during the walkthrough or at closing.

The final walkthrough

Before your closing date—often 24 hours before—the buyers and the buyers’ agent will do one more walkthrough of the house (for which you should not be present). They will go through every room of the house, inside and outside—a process that typically takes about a half hour. Some buyers will go into detail, testing every light switch. But in most cases, the buyer is just looking to make sure agreed-upon repairs were made and no new issues have crept up before closing.

“Buyers are basically looking for anything unexpected in the home,” Jarvis says. “Say, for example, there was a rug covering a problem area.” (Not that you would do that, you awesome seller, you.) If the buyers do find an issue, you may have a chance to fix the problem ahead of time.

“In most cases, the seller would be notified immediately after the walkthrough,” Jarvis says.

If the problem is big enough, you may have to delay your closing date to give time for the repair. But that only happens occasionally. Often, the buyers will take a trade.

“Many times, the buyers ask for money instead,” Jarvis says. But once the documents are ready to go, the terms usually can’t be altered to include the new amount, and that is where the trade comes in. “You typically see gift cards or appliance trades [added to the deal],” Jarvis says.

The closing

Many closings go smoothly. By this point, the buyers are excited to get into their new house, agreed-on repairs have been made, and the sellers are ready to get out. If things are going smoothly, the closing for you might boil down to a blur of paperwork. “The sellers sign eight documents and will have to sit through an hour and a half of watching the buyer sign,” Jarvis says.

Unless problems creep up—or the buyer wants to negotiate further—you only have two jobs: waiting and reading documents. Some are worth perusing more than others. For example, make sure you pay close attention to the settlement statement. “There are other documents you’ll need to sign like a warranty deed or ‘Don’t sue the attorney’ documents, but the settlement is the most important,” Jarvis says. It includes the money you’re making on the sale, plus tax implications. Make sure to check that these numbers jibe with what you’ve been told and were expecting—and if not, pull your real estate agent or attorney aside and point them out.

Last-minute drama

So what if things aren’t going smoothly? What if the buyers want to negotiate again? The buyer has the right to hash out concerns up until the time they sign the final document and take possession of your house. It makes sense to at least hear them out. After all, you’ve come this far.

If the buyer is negotiating for something you can solve without amending the terms (say, for example, you can offer up the washer and dryer in the house), you’ll probably be able to hammer those details out at closing.

But if you and the buyer have negotiated a lower price at the last minute, you may have to delay closing.

“Big changes just mess the whole thing up,” Jarvis says. “For example, a seller could say, ‘I’ll drop the price by $2,000.’  There’s an amendment that needs to be done and the loan would have to be rerun,” Jarvis says. That could take anywhere from one day to a week, depending on the bank’s turnaround times.

Once the negotiations are handled and the papers are signed, the buyers’ funds are transferred to your attorney, who will handle the payments to cover your loan and pay your real estate team. Thankfully, this part is handled by someone else.

And then comes the best part: You’ll get a check for the remainder, usually the same day in most states.

Now, all that’s left is the fun part: Officially moving out and moving on!

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The Closing Process: What Home Buyers Can Expect on the Big Day

On October 10, 2016   /   Closing  
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closing what to expect

By: Margaret Heindenry

The hardest parts are over: You’ve found that perfect home in a haystack of listings, negotiated a deal you’re happy with, and secured a mortgage—and you’re now in the home stretch of the home-buying process. Just one more critical hurdle lies ahead: the home closing. Also known as “settlement” or “escrow,” this is a day when all involved parties meet to make this transaction official.

To make sure you’re fully prepared, here’s what to expect from the closing process, step by step.

Step No. 1: How to prepare for a closing

Review your closing disclosure form: If you’re getting a loan, one of the best ways to prepare is to thoroughly review your HUD-1 settlement statement.

“This helps ensure the buyer understands the terms of their loan,” says Ben Niernberg, executive vice president of business development and operations at Proper Title.

The HUD-1 settlement statement outlines your exact mortgage payments, a loan’s terms (such as the interest rate and term) and additional fees you’ll pay, called closing costs (which total anywhere from 2% to 7% of your home’s price). Compare your HUD-1 to the good-faith estimate your lender gave you at the outset; make sure they’re similar and ask your lender to explain any discrepancies.

Thanks to new regulations put in effect in October 2015 known as TRID (which stands for TILA-RESPA Integrated Disclosure), you will receive your HUD-1 three days before closing so that you have plenty of time to check it over. (Before TRID, home buyers received this form only 24 hours ahead of time, which resulted in a lot more last-minute surprises and holdups.)

Do a final walk-through: A buyer’s contract usually allows for a walk-through of the home 24 hours before closing. First and foremost, you’re making sure the previous owner has vacated (unless you’ve allowed a rent-back arrangement where they can stick around for a period of time before moving). Second, make sure the home is in the condition agreed upon in the contract. If you’d had a home inspection done earlier and it had revealed problems that the sellers had agreed to fix, make sure those repairs were made.

If you find an issue during your walk-through, bring it up with the sellers as soon as possible. There’s no need to panic; at worst you can simply delay the closing until you resolve it.

Step No. 2: What to bring to closing

All your paperwork: You’ll want to bring proof of homeowners insurance, a copy of your contract with the seller, your home inspection reports, anything the bank required to approve your loan, and a government-issue photo ID. (Note to newlyweds who just changed their name: That ID needs to match the name that will appear on the property’s title and mortgage.)

Your down payment: You will already know from your disclosure form exactly how much  you’ll have to cough up for a down payment and closing costs. Yet since a personal check won’t cut it, be sure to ask before closing whether you should wire transfer those funds or if you’ll need to bring a cashier’s check. Also bring your personal checkbook to closing, since that’s typically fine to pay smaller fees and may come in handy in case any unforeseen expenses crop up.

Step No. 3: What to expect at closing

A bunch of people: Exactly who will be present at a closing (and where it’s held) depends on the state you live in, but there are certain supporting characters you can usually expect to make an appearance. The cast includes the home seller, the seller’s real estate agent as well as your own, buyer and seller attorneys, a representative from a title company (more on that below), and, occasionally, a representative from the bank or lender where you got your loan.

Title clearance: Before you can own or “take title” to a home, most lenders will require a title search of public property records to make sure there aren’t any liens or issues with transferring the property into your name (which is rare, but if something does crop up, it’s better to know that upfront).

Signing your name a lot: You’ll be putting your John Hancock on a pile of legal documents (so be prepared for a mild hand cramp if you’re not used to writing in cursive).

A few curveballs: Be prepared for things to go awry at the closing, like someone gets stuck in traffic, a document is missing, or a name is misspelled. But don’t stress, simply do what’s in your power to make the day go off without a hitch. For instance, don’t schedule something two hours after the closing is supposed to start in case your closing runs over.

If all goes well (as it usually does), you will eventually leave your home closing with a stack of documents (which you should save) and the keys to your new home (finally!).

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How Long Does It Really Take to Close on a House?

On September 5, 2016   /   Closing  
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house clock

By: Margaret Heidenry

You’ve turned on (and hopefully off) at least 20 water faucets and peered into about 50 closets (oh, the things you’ve seen!). And now, at long last, you’ve found the perfect home. So you make an offer, which is accepted. Congrats. Now, exactly how long does it take to close on a house?

Read on to get the gist of your closing timeline, plus what can slow things down—or speed things up.

Average home closing time frame

One recent study found that closing times are getting longer—on average it now takes 50 days. And while that may seem like an eternity to eager buyers or sellers, there’s good reason this doesn’t happen lickety-split. For one, buyers who require mortgages must finish the loan process and property appraisal.

Home buyers should also use this time to complete their due diligence by reviewing the property title and completing a home inspection, says Todd Huettner of Huettner Capitol. This chunk of time also gives both the seller and buyer time to plan their move.

What can slow down a closing?

Even though a property is under contract, the occasional hitch can make closing time go from warp speed to a ultra-slo-mo. Here are the typical hiccups.

  • Funds: Yes, you guessed it. The most common reason for a delayed closing is usually related to buyer financing, says Jerry Koller of California’s International Home. The leading issue: getting a loan approved. Buyers can avoid this time drain by obtaining a mortgage pre-approval letter, something many sellers require along with an offer. And remember, even with a pre-approval, it can take 30 days for the lender to complete its due diligence once an offer is made, so plan accordingly. Cash buyers save a significant amount of time by avoiding the mortgage process.
  • Appraisal disparities: In order for a mortgage to be approved, the bank needs to appraise the home. But if the appraisal comes in low, it will take time to renegotiate the price.
  • No insurance: Failing to secure homeowners insurance until the last minute slows down a closing since it’s often required before you move in, says Paul Moore, a real estate agent and broker in Virginia.
  • Contingencies: “If a buyer needs to sell their existing home and/or a seller needs to buy a new home, this could also delay the expected closing date,” says Colin T. McDonald at Re/Max Capital in Albany, NY.

How to speed up a closing

If you want to ensure your closing reaches the finish line in record time, here are things you can do to help.

  • Resolve title issues: Sellers should resolve any problems—such as a tax lien—regarding the title to the property, says Susan Naftulin, president of Rehab Financial Group. Provide the title company with copies of the satisfactions before the title search to avoid any red flags. If you haven’t satisfied the lien, informing the title company that you want it paid out of closing proceeds will keep the process moving along.

How Long Does It Take to Close on a House?

  • Address repairs: A home inspection usually generates a laundry list of repairs that need to be resolved before closing. While sellers can make the repairs, in general it’s much faster for them to just reduce the price or give the buyers a tax credit so they can make their repairs on their own time.
  • Communicate: Jack Matos, director of escrow operations at Palatine, IL–based Proper Title, says buyers with questions about the closing documents or walk-through concerns need to immediately inform their Realtor® or attorneys. “Any significant changes at this late hour will require new forms and review periods,” he says. All that said, don’t feel pressured to just rush through things without fully understanding them. When in doubt, don’t be afraid to take a breather and discuss whatever’s nagging you until you’re confident you can sign on the dotted line.
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How to Dodge a Closing Day Curveball: 3 Real-Life Home Saves

On April 17, 2016   /   Closing  
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By: Craig Donofrio

How to Dodge a Closing Day Curveball: 3 Real-Life Home Saves

With the MLB season set to begin, we’ve got baseball on the brain. Specifically, we’ve been thinking about how even the greatest sluggers sometimes strike out when faced with a nasty curveball, knuckleball, or slider. But hey, curveballs can strike—metaphorically speaking—in other parts of our life as well. Like buying a home!

A lot of twisty, unpredictable, and downright frustrating things can happen on closing day. But no matter what goes wrong, you may still be able to pull off a last-minute (home) save. So get out the scoreboard and heed the advice of these three buyers who were struck by surprises late in the ninth inning.

Time zone terror

Are you dealing with a buyer or seller in another time zone? It pays to plan accordingly. Michelle Faulkner, principal of Big Swing Communications, relayed a tale of time zone terror that happened to her 12 years ago. She and her then-husband planned to have a same-day sale and purchase, selling their condo in Watertown, MA, to a buyer from San Diego and buying a family-friendly place in the burbs of Reading, MA. The back-to-back closings were to take place on the Friday before the Fourth of July weekend.

“We didn’t realize until the closing he was using a West Coast bank for his mortgage. The closing went smoothly, except the funds from his bank hadn’t arrived. They were due ‘shortly’—our attorney told us not to worry, and we went on to the closing for our purchase,” Faulkner recalls. “We had a 17-month-old daughter and a packed moving truck waiting.”

The funds didn’t come through for four days. The seller’s attorney allowed them to move their stuff into their new place, but they couldn’t sleep there, so the family had to shack up with a friend. Later that day, “I felt a little nauseous,” she says. A familiar kind of nausea. “Yup, found out that night I was pregnant. Pregnant and temporarily homeless.”

Take-home lesson: When you’re doing back-to-back closings, make sure everyone is crystal clear on the timeline and time zones.

Absconded appliances

It’s imperative that everything is accounted for in writing, or else you may find yourself like the buyers in this story.

Last year, Brett Vlasek, a Realtor® with VIP Real Estate Brokers in Delray Beach, FL, represented a seller who had a ruby red Samsung washer and dryer set that was admired by many potential buyers who visited the home. One day, a buyer came through and, after remarking on how wonderful the appliances looked, put in an offer.

All was well in this small townhouse, until the final walk-through on closing day.

“The ruby red washer and dryer were replaced with a run-of-the-mill, plain white set,” Vlasek recalls. The buyer wasn’t happy, and refused to close on the house without the Samsungs. Alas, the sellers had already moved out of state—with the scarlet set. They were also a bit perplexed.

“They insisted they’d told the buyer and her agent that they were going to keep the red appliances and replace them before closing,” Vlasek says. Neither the sellers nor the buyer would budge. With the danger of a deal falling through, the agents came together and gave the buyer a credit at closing “to purchase a brand-new washer and dryer in whatever color she pleased.” Yeah, including Dorothy-slipper red.

Take-home lesson: Whether you’re a buyer or seller, make sure you convey what does or doesn’t come with the property, in writing. As a general rule, if it’s attached to the home—for example, light fixtures or built-in bookshelves—it stays, but appliances are considered movable. That said, getting it down in writing will help you avoid any closing day delays.

Liens from beyond the grave

After two years of his house sitting on the market in Gloucester, VA, Matt Sabo jumped when an offer came along. He, his wife, and their 11(!) kids would need to find a home to buy before their sale would close in four weeks.

They found a 1960s ranch estate that needed a few updates but seemed like a solid investment. Everything was looking good, and Sabo’s ginormous family wouldn’t be homeless. Right?

How to Dodge a Closing Day Curveball: 3 Real-Life Home Saves

“The bombshell came two days before closing,” Sabo recalls. The title search found there were liens against the property. “We were told it shouldn’t take more than a few weeks to get it straight.” It turned out to be more like five months. Naturally, his first reaction fell someplace between alarm and outright hysteria, but his Realtor/closer took the mound and saved the game.

“Our Realtor managed to work out a deal where we could stay in the house, rent-free, while the bankruptcy issue got cleared up,” Sabo says. “Ultimately we ended up moving into the house on time and living in it for five months until we closed.”

For anyone in a similar situation, Sabo says not to panic. Get your agent on the phone and start thinking outside the (batter’s) box.

“We got creative in making a deal, and it turned out well,” he says. “It was a case of a potential disaster turning into a blessing.”

Take-home lesson: Make sure to do a title search on a property you want as soon as possible—ideally, weeks before you close. That way you’ll uncover any liens or other problems long before you’re in too deep.

 

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