“The best-laid plans of mice and men often go awry.” Robert Burns
The closing process is often smooth and seamless from start to finish, but there are some things you should be aware of that may come up that you’ll want to avoid to ensure that your buyers and sellers navigate the process easily and successfully.
At Highland Title + Escrow, we occasionally see these common mistakes arise and how they can throw a closing off the rails for buyers and sellers. But, with our industry knowledge, years of experience and commitment to deliver a smooth settlement, we can get the settlement back on track so the client is happy and the agent looks like a hero.
- Timing and scheduling of closing – When putting together a contract, buyers often choose thirty to forty-five days for a settlement without confirming that the closing date is a good day for them. We occasionally get contracts with closing dates scheduled for national holidays, or sometimes, buyers say, “Oh, let’s do it this day. I’m off work,” without considering that if they are not working, other necessary parties, like the lenders and courthouse employees, may be unavailable because they aren’t working, as well. Buyers have to sign on the settlement date, but sellers have a little more flexibility, so thinking through the calendar of non-working days and planned vacation time can help avoid this mistake.
- Making purchases leading up to settlement – Lenders verify buyers’ assets and credit scores, and buying a car, a major appliance or furniture can significantly alter what the lender finds. Even pre-qualifying for a credit card can appear on credit reports and throw the qualification off course. Lenders look at accounts to ensure the money needed is there to qualify for loans. Stick to paying bills on time, and avoid any big money moves.
- Availability of funds – If money is being taken from a retirement or investment account, having that money available can be challenging. For example, if $40,000 is requested to be used as settlement funds, that takes time and paperwork for approval and is often out of the buyer’s hands. Buyers should investigate this process as early as possible to avoid settlement delays. Even if buyers are working with a bank, there is often a cap on the amount of money that can be moved in a day, so if $110,000 is needed, but the bank only allows $100,000 to be wired per day, it can delay the settlement process. Begin looking into the availability of funds as soon as the contract process begins so the money is there when needed.
- Bring wiring instructions to closing – Sellers often want their settlement proceeds wired to ensure funds are available quickly. Hence, bringing wiring instructions to settlement is essential. In Virginia, the Deed must be recorded before disbursement, often a day or two after the settlement date. Taking wiring instructions over the phone or through email opens up the settlement to fraud, so assuming the instructions can be sent along later won’t work. Wiring instructions are often as easy as bringing a check. Checks have account and routing numbers at the bottom, in addition to the bank’s name and the account. A check that can be voided will do. Account and routing numbers can also be pulled from apps, but a voided check is preferred to avoid mistakes.
- Last-minute estate planning – Moving title to the property into or out of a trust or adding or removing someone’s name can be a problem when taking place too close to settlement. All information must match up, and making these changes takes time. To avoid this mistake, do any estate planning well in advance.
- Sellers don’t have to wait – Sellers don’t have to wait for the settlement date to sign. They have a little more flexibility and often don’t know they do. Talk to the title company to arrange a signing date that fits the seller’s schedule.
- Invalid ID – Whether buyer or seller, coming to a settlement with an expired ID is a dealbreaker. Whether passport, driver’s license, military or state-issued identification, it must be valid, and the ID presented must be one of these options. Even working for a government agency and giving that ID won’t do. Confirm the government-issued identification that will be presented is valid to avoid this mistake.
Working with buyers and sellers to avoid these mistakes brings all parties to the settlement table, prepared and ready to move forward. Please contact us here with any questions.