THINGS THAT HAPPEN DURING THE CLOSING PROCESS THAT MAKE
WAVES (sometimes a tidal wave) THAT CAUSE THE REAL ESTATE
TRANSACTION IN PROCESS "FALL THROUGH"
REMEMBER AS YOU READ THESE SCENARIO'S: SELLING THE PROPERTY IS THE EASY PART, CLOSING AND FUNDING THE TRANSACTION IS WHERE EXPERIENCE AND WORK IS REQUIRED: They have all happened and will continue to be a Tidal Wave of problems to cope with:
These are things that could and do happen:
The Buyer:
Does not tell the truth on the Loan Application: (Thinks it won't show up:)
Has recent late payments on credit report:
Buyer loses job:
Co-borrower loses job or decides not to sign the papers:
Overtime income not allowed by underwriter:
Buyer decides to go purchase furniture (or anything) before closing not realizing it will show on credit report and change qualifying ratios: (This is a big and common error - you have to explain to Buyer to not purchase anything until transaction closes:)
Injury during escrow period:
Lacks real motivation about transaction: (Buyer's remorse -- you have to keep them excited with minimal delay).
Gift donor changes mind:
Cannot or will not locate tax returns:
Difficulty of lender to obtain verification on statements on application:
Interest rate increases and Buyer no longer qualifies:
Child support not disclosed on application ( changes qualifying ratios when discovered on credit report):
Buyer brings in hand-written pay stubs:
Buyer switches jobs during escrow period:
Buyer feels house was misrepresented after inspections:
Veterans DD214 form not available:
Buyer comes up short of cash money at closing:
More things happen and new ones every closing:
Does not appraise -- priced wrong on market:
The Seller:
Loses motivation to sell, ( job transfer does not come through, reconciles marriage, etc):
Cannot find a suitable replacement property for the price range -- realizes their house is great and suitable:
Will not allow inspectors or appraisers in house in a timely manner:
Removes property from the premises the Buyer thought or was not informed it was included: The items that have to remain with the property are listed in the contract and have to be excluded in writing when the contract is written to be removed. Example: Fireplace screens ( attached or not attached).
Cannot clear liens on money receiving from sale.
Partner or spouse will not sign at closing:
Delays the move-out date:
Did not complete the repairs before closing: (lender will not fund Buyer money to close:)
Seller's home goes into foreclosure during escrow period:
Misrepresents information about home and neighborhood:
Did not DISCLOSE all hidden or unknown defects and they are discovered by Home Inspector or Appriaser:
The Realtor's®:
Delays access to property for inspection and appraisal:
Does not get paperwork to lender in a timely manner:
Does not have enough experience in this type of transaction
Takes time off during transaction period and does not handle paperwork:
Misleads other parties to the transaction
Does not do proper or
sufficient homework on clients property or the clients(s) and waste
everyone's time:
The Lender's:
Does not properly qualify Buyer: ( Big problem now with all the Internet Lenders available):
Requires repairs to be completed before closing: ( Most all do now - will not escrow funds)
The market raises rates or costs and Buyer is not locked into rate:
Borrow does not qualify because of a late addition of information or credit score changes due to recent purchase:
Lender (underwriter) requires a last minute second appraisal or other documents: ( pretty common in today's market):
Lender didn't ask for all needed information at the beginning of the application process:
Lender doesn't fund loan in time to closed on contract date: ( contract automatically terminates per contract):
The Property:
Septic system or well does not pass inspection:
Termite report reveals substantial damage and Seller is not willing to fix:
Home was misrepresented as to size and condition: ( heated square footage quotes need to be as accurate as possible because, Buyer's are making their offer based on these quotes. Example: You say 2158 htd. and the Buyer offers $70.31 per foot on your quote which is $ 151,729 -- the appraiser comes up with 2079' htd. which calculates to $ 146,175. The Buyer then says or feels he offered $ $5,554 to much based on your original square foot quote and wants the sales price reduced to the $ 146,175 figure, which costs you the Seller th $5,554. THIS HAS HAPPENED: This is why we actually measure every home we list.
Home is found not to be structurally sound during inspection:
Home cannot be insured due to a lot of circumstances or exceptions are made to the policy based on previous claims or conditions that have occurred locally.
Property incorrectly zoned:
Survey determines an encroachment that is to costly to remedy and neighbor is not cooperative:
Unique or overbuilt home and will not appraise for neighborhood:
The Escrow/Title Company:
Fails to notify lender/agents of unsigned or unreturned documents:
Fails to obtain information from parties in a timely manner:
Lets principals ( Buyers or Sellers) leave town without getting all necessary documents signed:
Incorrectly prepares paperwork based on unverified information given:
Finds liens or title problems at the last minute:
The Appraiser:
Is not local and misunderstands the local market:
Does not complete the appraisal on time or makes an error:
No comparable sales available:
Makes important mistakes on appraisal and brings in value to low:
INSPECTIONS:
Inspection reports alarm Buyer and sale is terminated, earnest money refunded, house put back on market after valuable time lost.
There are other reasons too, but this is why we say " Selling the property is the easy part, closing and funding the transaction is where all the EXPERIENCE AND WORK is required."
