We had our regularly scheduled training on Friday to discuss the Northern Virginia Real Estate market and have Champion Title discuss worst case scenarios for closing and even a few other disasters to be aware of in today’s sales environment. As is the case in any sales situation, it is your job as a professional to manage your client’s expectations of what is going to happen at the walk-through and closing. Here are a few tips!
Tips for a Smoother Settlement
- Try not to Close on last day of the month
- Know the difference between a home inspection item and a walk-through, and know what it means to be in normal working order? This is extremely important when discussing age appropriate items.
- Disclose fees/additional costs upfront (e.g., admin fees, FHA/VA fees),Initial all changes to the original sales contract (“meeting of the minds “), initials/signatures on all pages on the contract – do your damn job!
- Work with service providers you know and trust, its all about the team being in place with all the changes going on with RESPA and the mortgage market.
- Confirm closing cost credits with the lender prior to ratification of your contract so there are no last minute surprises.
- Make sure termite inspection has been ordered and conducted. If treatment was necessary, make sure all parties are aware of treatment prior to closing
- Keep utilities on through the settlement date
- Contact the settlement company if you know you have any walk-through issues and conduct your walk-through the day BEFORE closing – not minutes before.
- Avoid escrowing funds if possible, lenders are tougher on this issue of allowing escrows
- Bring certified funds to the table or wire money prior to closing
- Know your client (e.g. reader, needs a POA, etc.) and what they will expect to happen at closing.
- Read the REO contract and know its details.
- Read the short sale approval letter, know and understand its terms
- Have sellers keep hazard insurance in place until a few days after closing
Now, you can’t prepare for every situation and we haven’t experienced everything we are going to experience but here are some recent situations that arose at settlements:
Dealing with the Unknowns
- Unexpected liens – IRS, HOA, etc. – are filed against the property.
- Bankruptcy – will not kill the deal but will take time because trustee must release the property and this can and will take time. Find out the seller’s situation in advance.
- More than 1 ratified contract – be smart, know your listings and only ratify one contract.
- Improper foreclosure – people added to title after settlement with no knowledge of bank, then property forecloses, proper notification or no notification was not given to person added to title – bank must re-foreclose and this is a lengthy process.
- Unilateral default – not closing because…
As always we discussed what our agents are finding out in the marketplace today when working with both buyers and sellers. Here are some comments on the conditions of our current market:
There is no inventory out there and houses are selling fast.
There are multiple contracts on a lot of listings throughout the area. Price points that are in the low $200’s are where we are seeing the most activity…
Some buyers are not aggressive enough on their first few offers and therefore are losing contracts.
Pricing is critical for listing prices – do not price a little high as there continue to be appraisal issues.
Agents are writing backup contracts on under contract properties – even foreclosure and regular sales.
An agent recently read that 70% of first offer short sale contracts fall out as buyers lose patience waiting on the process. It is a good idea to write back up contracts on short sales today.
We continue to have appraisal problems as there are not enough comparable sales for appraisers to utilize in their appraisal therefore they are claiming market is declining. One agent had an appraisal come in $100,000 low – they made buyers change lenders and verify qualifications of the new appraisal with the second appraiser. It is imperative to do your homework, know the market and present this to the appraisers.
Ethics are slipping with agents – keeping listings off market (coming soon) then selling them before they go on the market. The lack of returned phone calls, promptly responding to offers, etc. are the issues we continue to experience. And what is really scary is contracts and earnest money checks are being deposit after VREB regulations and even closing! Agents need to stay on top of their game or get out!
Rates continue to be great – we expected them to increase and they did for a short time but they have come back down – we are still below 5%.
You have heard it before – the more you learn, the more you earn so come to training! Get it? Got it? Good!
Now, go sell something!