Contract to Closing – What it takes to get the deal done
The Intricate Details between CONTRACT AND CLOSING
The following real estate investing information is crucial: Once an offer has been presented in writing to the list agent of a property, it’s the list agent’s responsibility to present that offer to the seller. If the offer is anything other than a full price offer, the list agent should prepare a list of comparable sold properties for discussion with the seller. This will allow the seller and list agent to discuss a potential counter offer and for the seller to make an informed decision. A list of active comparable properties may also be reviewed at this time just to have a snapshot of what the competition is like that the buyer had to choose from when deciding to make the offer.
Negotiations can be a lengthy process. Part of the negotiating process can be done verbally, HOWEVER, in real estate; nothing is binding until it is put into writing. Therefore, if you have given your list agent permission to negotiate back and forth with verbal counter offers, just know that the buyer can walk away at any point (as can you, the seller) until the offer is reduced to writing. Sometimes the logistics of the situation can dictate that verbal negotiations are the best course of action until price and terms can be agreed upon by both parties. For example, if either one or both parties are in another area other than where the property is—this happens frequently, especially in investment properties.
Once a contract has been ratified (agreed to in writing by both parties—Buyer and Seller), the list agent must then manage the details that occur between Contract and Closing:
- If the buyer will be FINANCING the purchase of the property, the list agent must immediately verify with the buyer’s lender that the buyer’s financing is solid. In some cases, this is actually done prior to ratification. Since most financed contracts can take 30-45 days or longer to close, the real estate agent should have a conversation with the lender to check the progress of the loan at a minimum of once a week. It can be helpful to the transaction if the list agent builds a good rapport with the lender. This lender’s ability to work swiftly and competently is of ultra importance to getting the loan to close and close timely and communication between the lender and the agent is key in any transaction.
- Coordinate for the PROPERTY INSPECTION, if applicable, to be performed by the buyer/buyer’s inspector. This usually just requires being certain that the buyer’s agent adheres to the inspection deadlines set forth in the real estate contract.
- Coordinate for the APPRAISAL to be done by the lender’s appointed appraiser—and for the appraiser to gain access to the property.
- Schedule for the TERMITE INSPECTION to be conducted by the termite inspector (in a lot of cases, the seller pays for the termite inspection as opposed to the buyer—this is usually always spelled out in the real estate contract).
- Discuss with the Seller any requests for REPAIRS that are a result of the inspection, and advise on the response to the requests. If repairs are necessary, list agents often times provide the seller with resources for having the repairs made (i.e., names of contractors, handymen, etc.). In some cases, there is another set of negotiations on the contract at this point. Oftentimes, Buyers and Sellers may agree to a monetary amount of concessions in lieu of having the actual repairs made. This may not be an option however, depending on the type of loan the Buyer is applying for. Some loans/lenders dictate that the actual repairs be made prior to closing.
- Coordinate REPAIR PEOPLE/HANDYMEN to gain access to the property and oversee repairs in the event of absentee Sellers.
- Advise the Seller of the specifics of CLOSING. States that are “attorney” states require that closings take place at an attorney’s office, other states may allow closing to take place at a “title” company’s office. The Realtor for the Seller will work closely with the Buyer’s agent to handle the details of closing. He/She will also provide Seller information to the closer (i.e., Seller’s Social Security Info, commission amounts to be paid to real estate brokers, warranty information on the property if applicable, Home Owner Association or Regime information, etc. Arrange and coordinate for any Power of Attorney documents to be drawn up in the case of an absentee Seller who does not plan to attend the closing of the property.
- Advise Seller when to schedule for shut off of utilities, terminate hazard/flood insurance, notify the current Lender, and Termite Bond Company of the pending transfer of ownership.
Other useful real estate investing information – Sellers Tips
