Closing Issues and Their Fixes
Phoenix is a unique city. Phoenix natives love their city’s year-round warm temperatures, picturesque Southwest landscape, spa resorts, well-designed golf courses, and downtown art centers. It’s no wonder that 1.6 million people live here.
The Phoenix housing market continues to ramp while other major markets saw a slowdown in 2018, and competition affects each stage of the closing process. Even the most experienced realtors must stay on top of trends to ensure the easiest close on a home sale that leaves everyone satisfied.
There are certainly rules and regulations that govern any major real estate transaction, and much of it happens on paper. However, a home sale also involves critical face-to-face interaction between various stakeholders beyond the buyer and seller—including attorneys, mortgage lenders, and realtors—all of whom can derail a real estate transaction in a matter of minutes.
Did you know that nearly a third of closings are delayed? 6% of those deals falling through completely. Given those odds, it’s most important to anticipate common causes of delay and to be prepared before closing. Realtors who are well-organized and armed with a game plan are best equipped to manage the potential pitfalls of any home sale. Here are three unsurprising setbacks that every real estate agent should be ready to address.
1. Financial delays
Financing makes up the majority of delays during closing. A buyer’s credit might not be as strong as they thought, and a first-time buyer might not be aware of the correlation between a down payment and interest rates.
Additionally, Phoenix home values have gone up 8.5% in the past year. If your client is new to the area or hasn’t been in the market for a decade, you might have to give them a pulse on the market.
Encourage your buyers to get pre-qualified for a loan before they begin to tour houses. Understanding how much house they can truly afford not only narrows down the market, but it saves both you and the buyer time.
It’s also important to disclose any additional fees related to each property the buyer considers. This includes HOA dues, private schooling costs, and utilities. Take the time to be candid about estimated closing costs too. Explain the approximate cost for earnest money, home inspections, surveys, titles, and more that they should expect.
If you’re representing the buyer, it’s important that you help them stay on top of the mortgage process by keeping them well ahead of deadlines, helping them gather and submit documentation on time, and ensuring that financial transactions clear the bank on time.
2. Revealing inspections
A home inspection can also turn a home sale on its head. Structural problems, like a foundation that’s falling apart or a roof that’s ready to cave, could throw everyone for a curveball. It’s most important that agents encourage buyers to invest in a detail-oriented, highly rated home inspector. After receiving the report back, go through the itemized list of recommended repairs and help your buyer prioritize their requests from the seller.
If you’re representing the seller, it’s worthwhile to help them prepare their home for resale. Lending some honest feedback on modernizations and maintenance could help get their property under contract faster. To streamline maintenance and to keep the house up and running while it’s listed, advise sellers to do some of the cosmetic repairs themselves or to use their home warranty. Plus, home repair insurance is a great marketing tool.
The final walk-through can be problematic too. Parties may not have fully agreed on what is or is not part of the home sale. If a buyer walks in on closing day and the refrigerator is missing, they might panic. Or perhaps an area rug had been covering a significant scratch across a hardwood floor up to this point.
Agents should educate themselves and their clients on what to look for each time they visit the house. This will help clients understand what to ask for in their offer, and what to expect during the final walk-through.
3. Trust issues
Nothing can stop a home sale faster quite like human emotion. Transparency is a must when you’re dealing with that much money. Clients need to understand how you, their agent, makes money and you need to understand how your actions could be interpreted (or misinterpreted) by your client.
Having an in-person conversation before beginning the process is helpful. This gives you both a good sense of personality and values. Realtors need to establish a constructive working relationship with each client that’s based on goodwill and trust. Be as responsive, candid, and personable as possible.
Remember, you’re the one with professional experience and your clients are trusting you as their advisor in one of the most important transactions of their lives. You’re in a powerful position. If you make this process as quick, easy, and efficient for your client as possible, your business is sure to grow.
Written By: Paige A Mitchell