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22 JUL

Eliminate High Anxiety – A Road to Smooth Deals

Eliminate High Anxiety – A Road to Smooth Deals

 

The days of Sellers modeling their behavior after Nurse Diesel in “High Anxiety” and having Buyers enjoy being abused (and enjoying it as Harvey Korman did) are over.  For you Gen Z’s, rent this one on Netflix right away!

A few weeks ago, I talked about how Sellers needed to stop telling Buyers to pound salt and get back to the nuances of compromise.

There is more at stake though.  The most poorly written contract isn’t much of a problem when a Buyer wants to close. It’s smooth closings all the way. However, as we are getting back to more equilibrium in deals, cancellations of contracts have started to rise back to normal levels.  And with that, there will be “High Anxiety” if contracts are not written properly. Lawyers are just lickin their chops! So, here are 27 very boring (but super important) tips and tricks for buyers, sellers, and real estate professionals to ensure you can keep those closings smooth.

 

  1. Get Learning! We have a number of links that are great for understanding contracts , buy side guides , seller guides.
  2. Contracts should be gone over slowly and precisely. Signatures and initials must not be missed.
  3. Everything must be in writing. Create a furniture inventory of what is included in the contract. This makes sure there are no disagreements come closing time.
  4. Your agent must know their dates. Missed dates can cause loss of deposit, loss of inspection rights, and loss of deals. We at Echo physically document the Effective/Execution, Escrow Deposit(s) Due, Inspection Period, Mortgage Commitment, Insurance and Closing Date. We have a handwritten one for our agents so they can also keep things front and center. Take a look here!
  5. Day one of the inspection period begins the DAY AFTER the effective/execution date. (All signatures/initials must be completed to be executed).
  6. The Buyer should always go over the inspection report with the inspector immediately after the inspection.  Face Time if you are out of town.  Inspection reports today are all over 100 pages.  Buyers can freak out over the sheer volume of the report (there’s lots of boiler plate language), but a verbal walk through explanation will really tell the Buyer what is important, and usually repairs can be handled if things are slowed down and explained properly.
  7. Any/All time periods of the contract CANNOT end on the Weekend or National Holidays. They still count towards the days, but cannot end a time period. If a time period, say Inspection Period, ends on a Saturday, there is an automatic extension to Monday by 5pm.
  8. It’s best to close during the middle of week, avoid Fridays and the last day of the month if possible. Tuesday, Wednesday and Thursdays are good days to close! If there is a delay with something like funding from a lender, usually it can be closed the next day, verses having an issue on a Friday and then having to wait until Monday to close.
  9. Keep track of dates!! Use a Checklist (we have one) and then populate those dates with reminders that go right into your phone and computer calendars.
  10. Important Closing Process Notes: Communication is extremely important with all parties – Buyer/Seller, Agents, Title Company, Contractors. Don’t assume everyone always knows what’s going on. We check in regularly/weekly with everyone to make sure things are on track and the ball doesn’t get dropped.
  11. Regarding wires – We have the title company send wiring instructions directly to our clients. There is a lot of wire fraud so one has to be careful here.
  12. Second Escrow deposit should be due the day after the inspection period ends. So if an inspection period is 7 days, have the second deposit due on the 8th day.
  13. Don’t wait until the last minute for inspection requests. The more time the better for reviewing reports, getting information about problems, and negotiating. The seller will most likely appreciate you not waiting until the last minute.
  14. Stay apart! Buyer or Seller should stay apart for the entire closing process if possible. There really is no reason for a Buyer and Seller to meet anytime during the closing process. This avoids complications and confrontations, especially if someone felt they were on the bad end of the deal.
  15. Make sure that any repairs are ALWAYS done by a licensed/insured contractor. If it is a short closing period, it might be best to ask for a credit at closing.
  16. You must send written notification (email is best) before midnight of the last day of the inspection period in order to cancel a deal. Otherwise the Buyer will be locked in and their deposit is at risk. Don’t wait until midnight on the last day of the inspection period to cancel a deal. Try to use 5pm as a deadline if possible. Also make sure to include the “Release and Cancellation Form”.
  17. If a deal falls apart due to inspection and there was something major like mold or water leak, you MUST disclose to the next Buyer. That’s why it is best for a Seller to make any major repairs themselves or give credits to avoid having to disclose to future Buyers.
  18. If there is an HOA or Condo Association, make sure to get an application in ASAP. Some take up to 30 days to approve. Be aware if you are looking for a short closing. Call HOA or Association directly for info/application, and get your info straight from the horse’s mouth – Same thing with Assessments, Application Fees, Capital Contributions,  and Membership Fees. Always check with the HOA/Association for any future assessments also!
  19. Beware of the loan commitment date with regards to the closing date. If there is a 30 day closing, its best to have loan commitment to be max of 21 days. For short closings, we recommended using a local mortgage company like Ryan Brown of Cross Country Mortgage who can provide loan commitment in about a week in most circumstances.
  20. Make sure to ask the listing agent for an extension if the loan commitment is late. If not, the Buyer will be locked into the deal regardless of if they are approved and escrow deposit is at risk or the Seller can cancel the contract.
  21. If a Buyer is getting a loan, they must have homeowners’ insurance. They may want to shop around so they should not wait for the last minute. During hurricane season, you can’t get insurance if you are in the cone. 11 Hurricane Preparation Tips
  22. Make sure that you send all invoices/receipts for any repairs to the listing agent prior to closing.
  23. Ask the Seller to make sure they schedule to end their services/utilities on the closing day, not before. Ask them to also provide you a list of services/utilities for the Buyer so they can set-up or continue use – pool guy, landscaper etc. The Buyer will appreciate it.
  24. Communicate with the Seller/Buyer about the closing date/final walk-thru and what the expectations are. Recommend that they sign closing documents separate/ahead of time, and bring a set of keys/remote to leave with the title company to turn over to Buyer.
  25. Make sure to get the Escrow Deposit wired to the title company at least 3 – 5 days prior to closing. The earlier the better so there is no delay and you don’t forget!
  26. Schedule a final walk-thru and complete. If there is an issue, broken appliance, A/C or water leak, missing furniture, don’t freak out. Credits can also be given at closing and/or money can be held back in escrow for repairs. There is a process in the contract to handle this as well with 125% of the cost of repair to be left in escrow if an agreement is not reached. Try to do the walk-through the day before or the day of closing.
  27. Sellers should leave a bottle of wine with a nice note for the Buyer.  This makes for good feelings and smoother closings!

Jeff Lichtenstein is owner and broker of Echo Fine Properties, a luxury real estate brokerage selling real estate in Jupiter  and homes in Palm Beach Gardens, Florida. He has 20 years of real estate experience, has closed over 1,000 transactions, and manages over 70 agents in a non-traditional model of real estate that mimics a traditional business model.  Some publications he has been quoted in.

Feel free to ask him a question directly at jeff@EchoFineProperties.com including a complimentary real valuation of your home.

Posted in Open House Blog, Real Estate Tips on July 22, 2022 at 6:55 am.

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