photo credit: ctrigger
If you have ever bought or sold a real estate property then you know that this transaction is a situation akin to that old saying that “it ain’t over ’til the fat lady sings”. People who are new to the process may believe that the real estate purchase is basically complete when the negotiation has been completed and the closing date has been set. However, veterans of real estate sales know that there are a whole lot of things that can go wrong at real estate closings. Until the closing is over and the transfer of the property is officially complete, neither buyer nor seller should assume that the deal is certain to go through.
For those who are new to the process of buying and selling real estate, here is an overview of some of the most common problems that may occur at real estate closings which can delay or terminate the deal:
- Failure of parties to show up at the closing. The most frustrating experience for those people who arrive at the real estate closing on time is when they end up waiting there for one party to show up and the party never does. In rare cases, this is due to a case of cold feet by the buyer or seller and results in a dead deal. However, the more common case is that someone who didn’t realize he or she had to be there to sign the papers is a no-show. For example, a married woman may be purchasing a home as a fix-up for sale and not realize that her husband is also going to need to be there to sign the paperwork. If he’s not there and she doesn’t have Power of Attorney to sign for him, the closing may need to be rescheduled to a time when he can be present.
- Failure to bring all of the paperwork and identification necessary to complete the closing. It often happens that one or both parties mistakenly fails to bring an important piece of paper or ID to the closing. Make sure that you know in advance what items are expected of you from the title agent and other professionals that you’re working with at the closing. Put all of these together in a file and make sure to bring the file with you to the closing in order to avoid problems with completing the deal.
- Sudden awareness of problems. In theory, both parties have already read all of the documents about the deal in full before the closing date and there will be no surprises. However, those people who don’t pay close attention to what they are reading may get to the closing and discover that there are issues they weren’t aware of that change the terms of the deal for them. For example, a more thorough read through the title report may reveal that certain issues are present with the home that affect the insurance of the home. Sudden awareness of this could cause the buyer to have second thoughts about making the deal.
- Insufficient funds. The financial details of the real estate transaction should be worked out prior to the closing date. However, that’s not always the case. The most common scenario here is that the buyer doesn’t realize that he or she needs to bring additional funds for the closing costs. If the buyer doesn’t have those funds available, the closing may not be able to take place. Other problems with the funds for the purchase may have to do with problems coming up in relation to the mortgage loan such as failure to pay off other mortgages or foreclosure payments prior to completing this transaction. If all is not in order with the money situation then there’s a good chance that the closing isn’t going to be completed at this time – and may not ever be completed.
In most cases, the closing of a real estate sale is easy. Everyone shows up with all of the proper documents and everything is in order before they arrive. They sign the papers, pay the closing costs and go their separate ways. However, things don’t always happen so smoothly. Neither the buyer nor the seller of a property should consider the real estate transaction complete until the real estate closing has been finalized. There are simply too many problems that might come up at (or just prior to) the closing which can cause the deal to have to be delayed or even to fall apart completely.