Closing Day Problems And How To Avoid Them

Nicole Smith Woodard
Published on May 21, 2016

Closing Day Problems And How To Avoid Them

Buying and selling a home in this crazy north Texas real estate market (whether it’s your first time or gazillionth time) can be a daunting experience, and the closing day is perhaps the most daunting part of the process.

Dealing with unexpected issues that may arise can be difficult. And, while some problems can be easily solved, others can derail a deal at the final hurdle. As long as you are represented by a seasoned real estate professional, the outcome will likely be positive. Knowing up front the potential pitfalls and what you can do to avoid them is critical to managing your emotions and expectations through the process.  I communicate with my clients every step of the way. And even though I can’t always prevent last minute issues, I am prepared for them and will advocate for my clients every step of the way.

Disheartening walk-through surprises

The final walk-through of the property is the number one cause of unexpected issues on closing day. The final inspection typically occurs the day before (or the morning of) closing day, leaving the buyer with little time to prepare and react to potential problems.

If the issues are unexpected and serious, your agent will carefully explain all of your options to you. By this point in the process, of course, you will already have had very thorough inspections, so there should not be any surprises the day before closing. If the seller agreed to make repairs, they should have done so well in advance of closing, and should also have sent receipts for repairs to their agent and have originals available for review inside the home.

What the seller takes with them

A common issue on closing day is confusion between the buyer and seller over which items are taken by the seller and which items remain with the property. Contracts in Texas clearly state what is staying with the home, and if the seller plans to remove something that should stay (most common include window treatments and decorative mirrors in bathrooms, television brackets, speakers), they should “exclude” it from the beginning so there are so surprises. Sometimes in the context of negotiating the deal, those particular items are not important enough to make issue of or, as is sometimes the case, the seller legitimately believes it’s ok to take these items. Some sellers will choose to leave major appliances or other personal property and, if this is the case, these items should be detailed on a Non-Realty Items Addendum that connects that agreement to the main contract. The simplest solution to any misunderstanding on closing day is to state in a contract what is expected to remain or must be removed. If it turns out that the sellers “forget” or do not comply with the contract, your agent will help you explore all of your options, including seeking a concession from the sellers at closing.

Credit issues

Most buyers have approval for a mortgage well over a month before closing day. However, slight changes to a financial situation can alter the credit rating and problems can occur right up to the point of closing on the deal. Buyers: the rule of thumb: do not do ANYTHING between contract and closing.  Do not change jobs! Do not apply for any new credit (even if you are lured by “open this card & save 10% on your purchase”)! Do not buy a car! Do not buy furniture (even if it’s 60-months-no-payment-no-interest! Do not make a late payment!  Do not accept large sums of money from anyone! (Seems counter-intuitive, right? Even large deposits alert mortgage underwriters and could cause problems for you!) We recently had a situation where the buyer’s credit score dropped 50 points in 30 days and they were not able to close on the home — a sad day for all parties.

To avoid any lending issues, the agents should be communicating with the mortgage provider all during the process, and especially the day before closing to ensure there are no issues, and resolve any if there are.

Money transfer problems

The crucial part of closing day is the transfer of funds. Some banks and financial institutions prefer to conduct transfers electronically, while others prefer certified checks. If you bring the wrong paperwork or make a mistake with account numbers, you can delay the deal.

While not to serious, it is best to avoid creating any unnecessary stress. Ask your mortgage provider and real estate agent what type of transfer is required.

Title issues

A title company will reveal details of the property, such as any liens, covenants, and past ownership, that can reveal serious issues on closing day. Give yourself time to consider any issues or stipulations that come with the property. Any tax owed on the property or claims of ownership from family members or co-owners can delay closing. While and unpaid HOA dues or covenants can be a surprise, but not derail closing on the property. It can be frustrating, but all title problems must be resolved before closing. However, when it comes to purchasing a property it is better to proceed with caution than making any costly errors that must be dealt with later.

Discovering a last minute problem does not necessarily mean the deal will explode. Many negotiations occur on the final day. It’s stressful and not ideal, but it happens nonetheless. This is just another reason to be working with an agent you can trust to advise you from start to finish.

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The above information regarding “Closing Day Problems and How to Avoid Them” was provided by Nicole Smith with Briggs Freeman Sotheby’s International Realty. Nicole has over 20 years of experience helping families buy and sell homes in the Dallas/Fort Worth area. If you’re thinking of selling or buying, she’d love to share her knowledge and expertise. 

The communities she proudly serves include Flower MoundSouthlakeGrapevineTrophy ClubKellerColleyville.

Closing Day Problems And How To Avoid Them
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