So the offer was accepted, inspections scheduled, and now it’s time to march toward closing. Agents have been through this process many times, but buyers only go through this a couple times in their lives, on average, and may not be privy to all the nuances that can affect the outcome. As exciting as it is to be in escrow buying a home, it is very easy to screw it up and leave yourself back where you started. Here are the top five things you can do as buyer to ensure your escrow’s demise:
If a buyer tells us that they are about to buy a car, big red flags go up. One might think that has nothing to do with the purchase of a new house! But, those of us in the business know that it has everything to do with it. Your loan preapproval is based off your financial situation at the start of your escrow, and actual loan approval can be impeded by making large purchases (especially ones that cause more debt and monthly payments). Do yourself a favor and save it for after closing!
How many first-time home buyers buy a house just before or after they get married? The answer is: a lot. And what do all these newlyweds have in common? No, not that…get your mind out of the gutter! They often receive large cash gifts from friends and relatives that, to a loan officer, may look just like a loan that requires repayment, and thus, requires documentation! Large cash gifts from grandma are going to require a fun conversation about getting a letter attesting to the fact that the cash gift was indeed a gift, not a loan. There’s not much you can do about this except keep the line of communication open with your lender, but it’s good to be aware that timing is everything! Again, anything that changes your financial situation during the process can be a reason for ruining the deal.
So, the inspections looked great (aside from the water damage in the closet, which the seller agreed to replace) and the loan is all set to go. But then it turns out there was something else in that closet. Five years of unpaid property tax bills! And you’re just finding out by running title a few days before closing. The seller doesn’t feel like paying and the buyer certainly isn’t going to. So now what? Well, if this had been addressed early enough in the process, there might have been time for a negotiation to save the deal. Now, the buyer has their back to the wall. Fret not: we always do our research for our clients to get all of this information up front, but not all representation is created equal. Make sure you educate yourself to be able to ask the right questions in the escrow process to avoid this kind of tragedy.
Whether it’s submitting W-2s, responding to a seller’s response about credits, or getting that loan commitment letter, there are a few things that just absolutely MUST be done on time. But remember, buyers aren’t professional home purchasers. They have jobs, lives, kids, dogs, and it’s pretty easy to forget to do something important. In the best case, the seller is forgiving and doesn’t have second thoughts about the price they accepted; also, many times this isn’t the case. We can’t stress enough how much seemingly little deadlines really matter. We don’t like to hound our clients, but when there is a deadline that can impede the sale it’s important that everyone is clear what is expected and what the consequences are for inactivity.
Oh, Google. The world’s highest trafficked search engine is such a great resource, and yet, so dangerous in the wrong hands. Just as doctors ask us not to “google” our medical conditions to self-diagnose, smart real estate agents know that a little bit of information about an important decision (such as getting a loan, hiring an inspector, or getting the right attorney) can be dangerous without an experienced guide. Online rates can be misleading, and buyers should stick with their trusted professional.
Author: Kevin Long