What to do when your home closing is delayed

What to do when your home closing is delayed

This is an UPDATE to a previous FAQ post.

As the year 2016 reaches the half way point, another issue is emerging as a challenge for homeowners and home-buyers coordinating move out/in dates.  After many years of closings being largely an efficient process (especially when experienced REALTORS and Lenders worked together), the implications of the new TRID guidelines aka RESPA/TILLA seem to be kicking in as more REALTORS and their clients are complaining about unforeseen closing delays.

The delay may be just a few days or sometimes stretch into weeks.  This is really a problem if you’re planning on buying another house, have immediate plans for the use of the money from the proceeds of your home, or have ordered moving vans, utilities and time off work.  The issue is complicated by the fact that you may not know about the delay until  a few days or a week before the closing was scheduled to occur.  Here are a few simple tips to help ease the transition process.

  1.  Don’t stress!  Shouting, harrasing or abusing your REALTOR, Lender, Appraiser etc only increases the tension in an already tense situation.  You want people to keep working to make your deal happen.  Anger adds more potential pitfalls and slow downs.
  2. Do follow-through and be persistent.  Especially as your transaction nears the finish line and even more so if the date of the closing draws near with no clear directive about when the clear to close will be available.  Knowing that you are going to be calling everyday or even twice a day to get an update keeps your case top of mind.  You can also e-mail for status updates.  Be clear about the fact that you simply want to be informed and stay in the loop.  You’re also going to be more likely to detect potential issues or miscues if you are integrally involved.
  3. Keep communication lines open.  This includes lines of communication with any parties who may be impacted by a slow down on your end including agents negotiating the transaction on the other side, movers, insurance representatives, your workplace etc.  It’s easier to reschedule a planned vacation with your boss if there has been regular communication regarding how you are proceeding with your home purchase or sale.  It’s also better to know potential ramifications about a delay with a mover with regards to costs etc. This may be an additional avenue for negotiation to compensate for the inconvenience and help to sweeten a transaction that would otherwise turn sour.
  4. Know that this too shall pass.  The vast majority of home sale transactions will close sooner or later.  In the long view, a few days or weeks delay is not as significant as the pleasure and joy you anticipate experiencing when you move into your new home or the relief that comes from a successful sale of your previous one.

More FAQ’s (Frequently Asked Questions) here

About the FAQ (Frequently Asked Questions Series)

This series is designed to answer questions that we hear clients asking over and over again.  Perhaps, you’ve wondered about some of these questions yourself.  While this is not intended to be an exhaustive explanation on the subject being discussed, it is our hope that these short blogs will provide helpful insights and may encourage you to explore further.  Please feel free to contact us by phone or e-mail with any questions.

FAQ Series: What’s the Difference between a Pre-qualification and a Pre-approval for a Mortage?

Question: What’s the Difference between a Pre-qualification and a Pre-approval for a Mortgage?

Answer:  Unfortunately, there is no absolute definition for the terms of Pre-qualification or Pre-approval.  The definition depends on the Lender who is issuing the terms/letter under which they are willing to loan money.  When purchasing a home or evaluating a potential buyer for the sale of your home as an owner, a better question to ask is: “What does the Pre-approval or Pre-qualification actually allow me to do“?

Ideally, a full Pre-approval means that the Lender has verified the accuracy of the documentation a potential borrower supplied pertaining to  finances, employment and rental and home ownership history.  It would also indicate that credit has been fully vetted with a mortgage report combining the results from three agencies and the borrower’s debt to asset ratios are appropriate to support the loan that is being requested.  The pre-approval would then amount to a check held in earnest pending finding a home which also meets the requirements necessary for the Lender to finance the purchase.

Unfortunately, there are significant variations in the use of both terms.  Generally a Pre-qualification carries the least amount of weight because it is filled with caveats and is often not fully verified and/or documented in the way most standard Pre-approval letters are.  While a Pre-qualification can serve as a good starting point when you are thinking about making a home purchase, you may find that the terms and conditions for an actual loan are different from your initial Pre-qualification.  Since the Lender has not necessarily verified the information you supplied during a Pre-qualification, there is no promise that a borrower will be in a position to qualify for a loan.

For an owner considering a purchase transaction, it may be prudent to request that a potential buyer submit to a Pre-approval process prior to taking your home off the market.  It would also be wise to check with the Lender to verify the steps that have been taken to ensure that the prospective buyer is financially qualified to purchase your home.

More FAQ’s (Frequently Asked Questions) here

About the FAQ (Frequently Asked Questions Series)

This series is designed to answer questions that we hear clients asking over and over again.  Perhaps, you’ve wondered about some of these questions yourself.  While this is not intended to be an exhaustive explanation on the subject being discussed, it is our hope that these short blogs will provide helpful insights and may encourage you to explore further.  Please feel free to contact us by phone or e-mail with any questions.

FAQ: When is the best time to put my home on the market for sale?

Question:  When is the best time to put my home on the market?

Answer:  I’m sure you think you know the answer to this.  It’s SPRING time of course!  Everyone knows that you put your home on the market in spring because that’s when everyone else puts their home up for sale.

It is true that more homes are placed for sale in spring and summer than at any other time during the year.  But it is also true that more home do not sell during this period as well.  It’s a competition thing.  With more competition, it may be more difficult to retail a home.  Many owners are surprised to find that another excellent time to retail a home can be in the months of October and November.  You’d be surprised at how may people dream of spending the holidays in a new home.  And homes look the prettiest during the holidays wouldn’t you say?

More FAQ’s (Frequently Asked Questions) here

About the FAQ (Frequently Asked Questions Series)

This series is designed to answer questions that we hear clients asking over and over again.  Perhaps, you’ve wondered about some of these questions yourself.  While this is not intended to be an exhaustive explanation on the subject being discussed, it is our hope that these short blogs will provide helpful insights and may encourage you to explore further.  Please feel free to contact us by phone or e-mail with any questions.

FAQ Series: Is it really necessary to hire an Inspector to inspect the home I want to buy?

Question:  Is it really necessary to Hire an Inspector to inspect the home I want to buy?

Answer:  Short answer is YES!  Long answer is as follows:

Purchasing a home is the largest financial investment that most Americans will every make.  That fact alone should give us pause about moving forward without due diligence.  Most of us don’t buy a car without ‘looking under the hood.’  Why would we consider buying an investment which costs many multiples of the price we’d pay for a car without having an additional pair of professional eyes reviewing the deal.

Home inspectors are trained to look for details about a home which you may be ignorant about or may have missed in your excitement about the prospect of owing your new home.  They can be an objective source of information about potential repairs or hazards.  In addition, a good home inspection will provide a lot of information about how to care for your home when you are the new owner.   A home inspection will give you vital details about the major structural components of your home as well as inspect the appliances, electrical service, plumbing, heating and history of infestation.  Other inspections may include testing for radon, mold and well/septic tests.

When you inspect a home, BEFORE you purchase it, you’re more likely to be able to negotiate for repairs with the owner.  That’s real money which doesn’t leave your pocket.  What’s not to love?

More FAQ’s (Frequently Asked Questions) here

About the FAQ (Frequently Asked Questions Series)

This series is designed to answer questions that we hear clients asking over and over again.  Perhaps, you’ve wondered about some of these questions yourself.  While this is not intended to be an exhaustive explanation on the subject being discussed, it is our hope that these short blogs will provide helpful insights and may encourage you to explore further.  Please feel free to contact us by phone or e-mail with any questions.

What Does It Cost To Sell Your Home in Grand Rapids, Michigan?

Will Selling My Home Cost A Fortune?

About the FAQ (Frequently Asked Questions Series)

This series is designed to answer questions that we hear clients asking over and over again.  Perhaps, you’ve wondered about some of these questions yourself.  While this is not intended to be an exhaustive explanation on the subject being discussed, it is our hope that these short blogs will provide helpful insights and may encourage you to explore further.  Please feel free to contact us by phone or e-mail with any questions.

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Glad you asked!  This is a Valid Question.  Sometimes, the real estate process can feel as though the Costs are not readily discernible or understandable.  Because a real estate transaction coordinates the services of different specialities such as title work, required inspections, real estate services and state and local sales tax, this can be a little intimidating.

To simply the process, I’ve compiled a comprehensive list of costs that may be a part of a real estate transaction.  Your home is unique however, so to get a detailed analysis which relates to your specific situation you should contact a qualified real estate specialist. I find it helpful to think about the Costs of Selling Your Grand Rapids, Mi home in 3 categories.  They are as follows:

Maintenance/Inspection/Housing:

Home Warranty:  If you choose to purchase one will run approximately $350 ~ $375 for the average single family residence.  If your home has additional amenities which you would like covered by the program or has been vacant for some time, you will want to get a certified quote from the company you choose.

Home Staging:  An appointment will typically run between $100 ~ $150 for an initial consultation.  If further work is ordered, this is usually quoted on an hourly basis plus costs for materials.  Home Staging can significantly enhance the Value of a Home and may actually increase your Net profits by thousands of dollars.

Home Inspections/Appraisals:  These are usually paid for by BUYERS.  However, some home owners prefer to know about issues before their homes go on the market, so these items are not a detraction to potential buyers. An appraisal ordered prior to placing you home on the market can be a powerful support to a Certified Market Analysis performed by a Real Estate Broker.  These 2 items will range between $195.00 ~ $375 for an appraisal and $300 ~ $450 for a typical set of complete inspections.

Home Repairs:  To facilitate your home sale, you may have to do some minor or major repairs.  If a new roof is required, this may cost several thousand dollars.  On the other hand, a little painting and sprucing up may be a much smaller investment.  Like staging, home repairs more than pay for themselves in faster and better offers for your home.

Sales Related Costs:

Title Insurance:  The cost of obtaining Title Insurance on your home will vary depending on the sales price of your home.  Most title companies will also provide a credit back to you if you have refinanced within the past 3-5 years.  Your buyer will also be required to purchase a smaller policy to protect the interest of the mortgage note holder.  Since these costs are revised from time to time, you should contact your real estate agent or title company to get the exact figure.  At Audu Real Estate, our clients are provided with this number when they sign a listing contract and/or sell a home.

Sidewalk Inspection:  The city of Grand Rapids mandates that all home owners in the city has this inspection done at the Point of Sale.  The cost is $45.  If the inspection indicates that repairs have to be done to the sidewalks, then the home owner must take care of these repairs in order to sell the home.  The city will provide estimate and a list of approved contractors.  The work must be done according to very explicit specifications.  This cost can become a lien on a home if the work is not completed satisfactorily prior to the home in question being sold.

Commissions:  Real Estate commissions will vary based on a number of factors in the transaction.  In the Grand Rapids area, there are companies that offer Flat Fee Services in which your home is simply placed on the MLS for several hundred  dollars.  As a full service real estate company, we understand that the competition for homes is fierce.  We provide a full menu of services which include: multi-media marketing on traditional and emerging web portals, a comprehensive strategic pricing analysis, automated response feedback, regular market updates, Open House services, Staging, Negotiation and Transaction Management Services.  We also offer rebates to clients who utilize our services for more than one transaction.  You many contact us for a detailed breakdown of our costs.

Sales Transfer Tax:  These costs are similar to a tax on the sale of your home.  These fees are charged by the State of Michigan and the local government area when a home is sold in Grand Rapids, Michigan.  The fees are assessed per $500.  However, a simple way to quickly calculate how much you will owe based on the price for which your home sells is to assess approximately $8.60 per $1,000.

Processing Fees/Concessions:

Closing Fees:  When your home closes, you will typically utilize the services of a Title Company to handle all the escrows, facilitate signing of the documents and disburse funds. The fee for this service is split between the buyer and the seller.  The seller’s fee has averaged between about  $175 ~ $200 in most closing offices in the Grand Rapids, Michigan area.

Overnight Fees:  When you close your Loan, the Title Company will overnight your loan documents to your bank.  The fee typically charged for this service is $25 ~ $30.

Administrative Fees:  Many real estate companies will charge a Fee to process a transaction.  This typically ranges between $195 ~ $295.

Buyer Concessions:  These are fees which are typically only asked for WHEN you actually have a ready, willing and able buyer who wants to purchase YOUR home.  The amount requested may vary.  Typically they are 3-6% of the Sales Price.  This money can be utilized by the buyer to assist with down-payment or mortgage costs.  They may also be tax deductible to you as a seller…you should consult with your tax adviser about this.  This fee enables a buyer who may not otherwise have been able to purchase your home to do so.

**Over-Pricing FEE:

Yes, there is a Fee for over-pricing your home!  Last year, home owners who over-priced their property in Grand Rapids, Michigan paid a penalty of approximately 15 ~ 25% of their home’s initial asking price in order to sell.  It’s expensive to over-price your home.  Over-pricing helps to sell other home’s in the neighborhood which are more in line with market values.  Over-pricing costs also include additional mortgage payments and home maintenance costs.

To Avoid this penalty, please feel free to contact Audu Real Estate for a comprehensive written assessment of the costs of Selling AND a Comprehensive 15-20 page strategic Pricing Analysis.

Related Reading:

How to Save Money When Selling Your West Michigan Home

Housing Recovery Underway in West Michigan 2013

photo is courtesty of S’s photostream on flickr.com

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