Midwest Real Estate Data

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Housing Trends

December 2018

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Closing the Deal

Many homebuyers mistakenly confuse getting a contract on a home with closing the deal. Don’t be one of them. Realtors refer to this challenging period as “contract to close.” Of course, getting a signed contract is reason for celebration for both the buyer and the seller, but there’s still a long way to go before the homebuying transaction can be successfully completed.

There are a variety of things that can happen during “contract to close” to derail the process. While they may not halt the sale altogether, each can potentially cause lengthy delays and even escalate into a legal matter. Understanding some of the most common pitfalls can help you successfully close the deal.

Show me the money
You will need to have some funds available at closing, but your lender will provide you with a good faith estimate of all your closing costs within three business days of filing your loan application. Closing costs include charges for establishing and transferring ownership, the costs of getting a mortgage, including the appraisal, credit checks, loan documentation fees, notary charges, loan origination and underwriting. So before the closing process begins, make sure that you have budgeted for the necessary funds.

Problems during inspection
If you are looking at purchasing a home but still need to get the home inspected, consider purchasing an option period to protect yourself. An option period allows you to buy some time, without losing the contract or your earnest money, to professionally inspect the property prior to closing. In fact, the option provision allows buyers to terminate a new-home or resale contract –
for any reason at all – and still receive a refund of their earnest money. The length of the option period will vary depending on the terms of the contract.

It all depends
Contingencies make the contract dependent on some action. Examples include financing or selling an existing home before purchasing another. If either party fails to meet the contingencies, as laid out in the contract, the sale could potentially fall through. What happens at that point depends on the circumstances and the specifics agreed upon in the contract.

It’s important to meet any deadlines outlined in the sales contract. Failure to do so could delay the sale or send the seller off to find another buyer. If it looks like a deadline is unattainable, inform your Realtor right away so he or she can help meet the deadline or get an extension if possible.

Whether you’re a buyer or a seller, there is something that you should be aware of that the real estate books typically fail to mention – emotions. No matter what side of the transaction you’re on, there is always the chance that your emotions will get in the way. It could be something very minor, but the seller’s pride won’t allow him or her to give in. Perhaps the buyer is angry over the fact that the seller won’t leave the new stove. Whatever the case, anger or pride can potentially stand in the way of moving the transaction forward.

Cold feet
Some buyers and even sellers find that somewhere between the contract and the closing process they get cold feet. Maybe the seller has decided that “moving up” isn’t the right financial decision at this time. Perhaps the buyer realizes the monthly mortgage will stretch their budget too thin. Whatever the case, getting cold feet happens. And it helps to know what to look out for – no matter what side of the transaction you’re on.

If you’re the one having second thoughts, talk with you Realtor right away. Discussing your situation may help you remember why you do want to move ahead after all – or you can work toward the best resolution than springing a last minute surprise.

Successfully closing a real estate transaction can be challenging for buyers and sellers. Each transaction is different than the one before and each set of circumstances is unique. “Contract to closing” is a great time to rely on your Texas Realtor. Your Realtor is an expert at closing the deal and can help you through the challenging times.

Source: Texas Association of REALTORS®
Reprinted with permission.