By Doug Dean
Trick or Treat! It’s that time of year! In our Trick or Treat edition, we will give you Tricks to ensure smooth closings, and our Halloween Treat for you.
One way we like to assist real estate agents that we work with is by providing CE (continuing education) classes. I’m currently teaching about 4 CE Classes each month (check our website calendar for a list of CE classes). I really enjoy teaching CE classes, meeting the students and providing not only the necessary CE credits, but also helpful information.
One of our popular classes is “From Contract to Closing: What to Expect From The Closing Process”. It’s based on our attorney’s collective knowledge from closing tens of thousands of transactions over 15+ years. I’ve summarized a few of the key points below. While many might seem simple and basic, it is often the overlooked basic items that cause problems, not the obscure areas of the law. Understanding the Tricks below will help ensure your closings go smoothly and on-time!
Trick #1: “The 411” When we begin processing a file, we reach out to the buyers and sellers, to gather important information needed for closing. A contract that has Buyer and Seller names spelled properly, with phone numbers and email addresses, allows us to get to work much more quickly, without having to go back to the agents to get contact information for the parties.
Trick #2: “The Information Sheets” Most all firms, ours included, have Buyer and Seller Information Sheets, which are used to collect information we need to process the file for closing. Let your parties know to anticipate receiving an information sheet, and ask them to complete it and return it promptly. Delays in receiving this critical information slows down our ability to order information we need for closing, like payoffs, HOA information, insurance, etc.
Trick #3: “Beware the HOA/COA Closing Letter!” If the property is in a community with an HOA or COA (Home Owners Association or Condo Owners Association), we will need an HOA/COA Closing Letter from the Association. This official document gives us information about the current account, confirming if it is paid current, and fees we might need to collect at closing, such as an Initiation Fee, Transfer Fee, and the like.
There is typically a fee to obtain this Closing Letter, and they are often expensive (anywhere from $10 to $1000; if you can believe that!). We look to the purchase/sales contract for the “Community Association Disclosure” to see which party is obligated to pay for the Closing Letter. We make arrangements with the Association to order the Closing Letter, and contact the responsible party to pay for it. If a party does not timely pay for the Letter, it can either delay the closing, or the cost will go up, because now the HOA will want a “Rush Fee” of perhaps $200 or more.
Make sure your parties are aware that they may be responsible for paying for an HOA/COA Closing Letter, and that doing so timely will keep the closing on schedule and avoid paying rush fees for the Closing Letter.
Trick #4: “The Same Page” Contracts are often revised, to address inspection findings, changes in sales price or closing costs, etc. Be sure that the Lender and Closing Attorney are kept in the loop on contract amendments. At one closing, the parties asked for the $500 deck repair credit from the Seller to the Buyer. We advised that we had not seen that, and could they provide more information? They advised it was in Amendment 4 of the Contract. Unfortunately, both the Lender and our firm had only received through Amendment 2 of the contract. The loan had to go back through underwriting with the Lender to address Amendments 3 & 4, resulting in a lengthy delay at closing.
Trick #5: “The Review” Ask for a preliminary copy of the Closing Statement at least a day before closing. Review it carefully, looking for such items as: Earnest money (is it shown on the closing statement; in the correct amount; held by the proper party)? Home Warranty (issued by the proper company?; proper amount?; paid for by the proper party?) the Sales Commission (broker names listed properly? payment amounts correct?). You get the idea. With a little review in advance, any inadvertent errors can be quickly fixed before closing.
Trick #6: “Show Me the Money!” Be sure that your parties know how much to bring to closing, and in what form. Make sure they wire funds in excess of $5,000, and that you have advised them about how to avoid wire fraud. For amounts less than $5,000, check with your closing attorney to see what amounts may be paid with a personal check, and what amounts require a cashier’s check.
Enough Tricks! Now, for the Treat!
Halloween Spirit Treat Do you have photos of your Halloween Spirit? We’d love to see them! Your favorite Halloween costumes for you, your children, or pets? Your Halloween party? Your house, decorated for Halloween? Post your Halloween Spirit photos to Facebook or Instagram, and tag Shafritz & Dean, LLC. We will pick our favorite Halloween spirit photos, and give out a few cash prizes for 1ST, 2ND, and 3RD place!
Trick or Treat! Have fun, and be safe!