Leave luck to the lottery, St. Patricks day and horseshoes…
We are often asked how to have great closings, and it truly does take a village. Recently a mortgage buddy told me there are 1260 things that can go wrong from the time a person starts to look for their home until they close. I have no idea how he or his company came up with that stat. I bet it’s more! There are so many humans using so many programs and hardware that what’s amazing isn’t the little hiccups but rather how often things go right.
But we at Shafritz & Dean are after more than, “we go it closed”. After all our tag-line is “Everyone Walks Away Happy” and that’s what we aspire to! Here are 10 tips to those of us serving buyers, sellers and borrowers coming from a guy who has been a loan officer for 10 years (including commercial and residential) and an attorney for nearly 20 now. Said another way … I am getting old J.
I have always known that a smooth closing, a good closing, includes three things – 1) efficient – 1 hr. or less, 2) funded and disbursed … our friends of the firm want to walk away with their commissions and 3) good chocolates on the table! The only thing we can do without the help of the lender and the realtors is make sure our chocolate selection is grand and the bowl filled! For the other two items above keep reading….
These tips, which are not the complete list, will lead to a better closing experience for all and they are true whether you close with Shafritz & Dean as we hope and prefer or anywhere else. [Note: These 10 tips are not designed to address the things which are not related to the closing. So for example, we aren’t getting into drafting issues or rate lock issues. Those are your expertise.]
Tip # 1: Agents insist on the ALTA Combined Closing Statements (CSS) a minimum of 3 days in advance and read them closely prior to closing – read them for typos, for items on the other side which may impact your client (ex. Home warranty … if you represent the buyer and seller is paying look to see it’s on the seller side), for correct figures, for correct closing cost contributions and yes is your commission correct. Note that if the Broker name is misspelled on the prelim ALTA, if it doesn’t get fixed it will be misspelled on your commission checks.
Tip # 2: Pay at Closes and Disbursement Authorizations are great but they must be correct and you have to remember to bring the Earnest Money. As a young loan officer I often heard agents complain about the gap between the closing and when they got paid. Now brokers treat agents like clients (as I think they should!) and want to allow them to get their portion of the commission at closing. Unfortunately, we often find the math is wrong and just as often even the experienced agent forgets the earnest money. This delays closing and makes it taxing on everyone. So when you pickup the PAC or DA, make sure you tic and tie it to the ALTA CSS and pick up that EM!!!
Tip #3: Get a confirmation the attorney has received the contract and the title order from the lender! Technology is great, but remember: it’s not communication when you send an email, it’s communication when someone receives and responds to your email. Our firm has a process and we let everyone know that we confirm every order. We do this to express our sincere gratitude that we have been selected to assist parties and professionals with a closing and to confirm receipt of the order! I can’t tell you the number of times agents thought they sent a contract or loan officers/processors thought they sent a title request only to have everyone scrambling at the eleventh hour. Finger pointing aside, if the law firm, doesn’t have the order, it’s not being processed. So either get the confirmation from the firms who do confirm or contact those who don’t. No news is not always good news
Tip #4: Wires … oy vey they drive me crazy part 1 – Georgia law is clear – for funds in excess of $5000 we must have a wire. Not an ACH, not bitcoins or a promise that the wire is on the way. Yet, people send ACHs which many firms like ours summarily reject and even those who don’t are left waiting days sometime for the ACHs to show and for the reverse period (yes ACHs can be challenged and reversed) to expire. Or they want to bring a Cashier’s Check for a large sum of money. If a client intends to use a large cashiers check, it must be delivered well in advance of closing so that it can be deposited and clear the account [Yes –Cashier’s check checks can be frozen, have a stop-payment, or be returned, so they must clear the account in advance of closing.]
For the record, no reputable will accept bit-coins or any crypto-currency for closings. And while a bag of cash may be legal tender, most firms including ours don’t want more than a small amount in cash. Too much risk that we may get intercepted on the way to the bank. [Remember It’s a Wonderful Life and Jimmy Stewart’s uncle losing $10,000 of the savings and loan.] So let’s make sure from day 1 to day of closing it’s clear that parties need to wire funds.
Finally, tell your frugal clients that their bankers in attempt to save them up to $25 will suggest they electronically transfer their money. This is code for ACH and remind them to stay strong and pay the wire fee!
Tip #5 Wires … oy vey they drive me crazy part 2- Wires are great except when fraudsters get involved and encourage your clients to wire funds to their bogus accounts and encourage law firms to wire proceeds to bogus accounts. “Stay out of the middle” is the summary from an earlier article on wire fraud, and make sure your clients contact the closing attorney directly for wire instructions and confirm independently they are valid. One agent suggested that, on no less than 4 closings (all with different attorneys), fraudsters had encourage her clients to send a wire to their bogus account. News flash… it could be your email has been compromised. Don’t get in the middle and if it happens more than once consider better email security.
Tip #6: Certain Days are better than others – There are 6 -7 days which I advise my relationships to avoid closing because they are inevitably much busier – believe it or not we’ll close 60% of our transactions on Fridays, the last day for residential refis to come out of rescission and the last calendar day of the month. Double witching day is when Friday is the last business day of the month, but, for some reason, people like these days.
Buyers like Fridays so they can move over the weekend. But if they close Thursday, buyers can have a 3 day weekend.
Loan officers are ever-cognizant of the last day for refinances to close, and still fund in the same month, after the 3-days right-to-cancel expires. This is done to minimize the amount of per-diem interest paid for the remainder of the month. Just close a day or two earlier, and you’ll avoid the rush.
Finally the last day of the month. Someone told an agent along time ago it’s better for the buyer if you close the last day of the month and you’ll save money. This is inaccurate. You may save having to bring a little less money to closing, but you are not saving money. Many lenders will do an interest credit up to 5 days so you could close the first 5 days of the month and have no prepaid interest those days.
My loan officers buddies who close refis the last day of the month… while I love the business it’s got to be the worst day possible to schedule a refi. Unless your rate lock is expiring, the party is leaving the country for a month the following day and there is no other alternative, avoid scheduling a refinance the last business day of the month.
Tip #8: Who, what, when and where…
Who – make sure the right people come to closing – wife or husband is going on security deed then they have to be at the closing. Wife and Husband are both on title both need to show up (or provide an acceptable alternative i.e. POA—which must be arranged and confirmed in advance). This causes more delays than are necessary, and delays closing, funding and disbursing a file.
What – In addition to who, we need to know what to bring – two forms of ID one of which is Driver’s License – current license or if no license a current valid passport. It really surprises me when parties show up with no current license. They forgot or don’t have one and everyone wants me to make an exception. Sorry – we live in 2018 where identity theft is real and where people create grand fraud schemes.
Bring your checkbook because if you have to come out of pocket for a nominal sum (our firm $1000 at most some firms it’s $500) most firms will accept a check to keep things moving.
Bring anything you think you have scanned to the attorney which might be needed such as the Home Owners Insurance (Declarations Page + Invoice or Paid Receipt), Trust Documents, Death Certificates etc.
When & Where – Despite our best efforts parties and professionals are not always tuned in for the day and time of closing. Sometimes they know and decide to come later or earlier. We all have limited bandwidth and if you are an hour late for a closing you don’t just delay the parties at closing by an hour. It may be that we have closings right behind yours and so the delay becomes several hours.
Also, once a law firm has more than 1 address it’s an invitation for people to go to the wrong location. These kind of details need to be confirmed before one party shows up at our Perimeter office and the other at our Suwanee office and we have to wait 35 minutes (without traffic) for the parties to show up in the right location.
So iron out those details with the firm and with your clients so we end up at the right place and at the right time.
Tip # 9 Make sure the lender and attorney have all necessary addendums. Many years ago if the sales price changed by going down or a repair had to be made, we could find out at closing with limited delay. Today, that’s a disaster and it happens – I have received amendments at closing which result in hours or days of delays because the agents forgot to send the amendment to the lender and attorney. So once you amend the original contract and every time you do so, please make sure the lender and secondarily the law firm receives any changes.
Tip # 10 We are dealing with people; when you know people are difficult or their situations are difficult let the law firm know. Husband and wife hate each other and will be getting a divorce, it’s a good idea to share this in advance with your friendly neighborhood attorney. The worst shouting ever at my closing table has been husbands and wives (or exs.) who are screaming at each other while the rest of us look for the closest exit.
How about the dreaded “reader.” That person is guaranteed unless the most skilled attorney can work them quicker to turn a 45 minute closing into a three hour closing at best. What should we do – get them the package prior to closing. Not sure you have a reader but think you might? Ask them and explain that everyone including the firm budgets approximately 1 hour for closing and it will take them 6 hours to really read the package. This will encourage the reader to ask for the package up front and avoid them reading at the table.
Finally one more example we see frequently see are parties or agents who don’t like one another. If we know up front we can separate parties.
Push them to be at the closing at the same time just in different rooms because when parties schedule different times even when they aren’t at odds there is more room for problems and delays since one party may not discover an error even in their favor which the other party finds later that day.
So, there you have it… a “top ten” list that, if followed, will guarantee smoother and happier closings!