This article was originally published in Real Estate Agent Magazine Twin Cities, written by Charity Malmberg, Founder and President of Trademark Title
If you were to Google the words “smooth closing,” you’d get myriad different title, lender and real estate websites, each telling you their own five or 10 best steps to ensure a smooth, on-time closing. Most of the content is accurate and, in the end, we all know what we need to have – documents completed in their entirety, turned in as early as possible and most importantly, communicate! This goes for all parties to a real estate transaction … buyer, seller, real estate agent(s), lender and title service.
So then, why do we continue to run into so many issues and not close on time? Why are we not getting the necessary paperwork done before the closing deadline? Are we really so preoccupied that we have lost one or more of the fundamental keys to success – time management, planning, organization and delegation of authority – or simply just prioritizing our days?
I have my own ideas or “steps” to ensuring a smooth closing, but this can only happen in a perfect world. All parties must be at their computers, or with their phone all at the same time in order to communicate efficiently. In this perfect world the borrower has an 800-plus credit score and the seller and buyer ended up being “besties” and the title never had a cloud on it. Maybe I’m dreaming; we all know that perfect world doesn’t exist. No one group of people can be readily available all the time.
Perhaps understanding the big picture is key. Knowing what happens every step of the process for each party and why each party needs what they do, may help bridge the gap.
Here’s a brief overview:
Starting off the process, the REALTOR® writes up a purchase agreement (PA) on the property, where hopefully the seller disclosures are completed in full and the city truth in housing, if applicable, is complete. Find out who should be the buyer(s) on the PA from the lender. Adding borrowers later can cause delays if name searches come back with issues.
The paperwork is turned into brokerage, title and lender by secure email if possible. This paperwork includes an information sheet with PA details and, of course, your commissions, any brokerage fees, contact information for all parties to the transaction, the complete PA with seller disclosures and sometimes, other company specific forms. Check with your brokerage or title for specific requirements.
The title company opens the order in a title software system. Next, necessary searches are ordered (turnaround times vary vendor-to-vendor, but roughly two to five days) and then the title examiner must research the searches (about 100-300 or more pages of information, if you’re lucky). Simultaneously, the closing team is working toward gathering any missing data, clearing title, scheduling the closing to take place and communicating with all parties.
During this time, the lender is working diligently to gather information to ensure all applications are submitted, disclosures are out in time and working toward fulfilling the new buyer’s dream of owning a new home. Having a consistent message between you and the lender to the borrower about returning all requests within 24-48 hours is vital to closing on time.
Once the loan is approved, there is some back-and-forth communication between the lender and the title company to ensure all documents were prepared accurately, both files balance to the penny, and all compliance measures and underwriter conditions have been met.
If all of the above happens in a timely and orderly fashion with no communication delays, all parties gather at a convenient location and time for a majority of the parties involved.
Next, funding the loan takes place. Depending on how busy the lender is (stay away from the last Friday of the month and around the 15th, as those are the two busiest days to close) will determine how long your clients may need to wait in order to give the go-ahead to the movers or to make the next closing.
What I can tell you about trying to have a smooth closing is this:
1. Choose clients you want to work with and who want to work with you. If they are difficult at the listing or open house, save yourself some time and trouble by getting out! Let someone else be their whipping boy.
2. Choose a lender that is reputable and that you know can get the job done. A good lender will provide updates and keep you posted throughout the entire process. It is equally important to build a strong relationship with your lender. When you and your lender are on good terms, they will most likely communicate with you more frequently and effectively.
3. Choose a title company that is also reputable and can give your client(s) the service they deserve. Did you know that Trademark guarantees our title fees, which saves time, money and ultimately doesn’t cause a delay because of inaccurate disclosure of fees?
4. Don’t close on a Friday. Granted, the buyer will ideally want to have a long weekend to move into their new home, and the seller will just want it all done ASAP. Consider this if there are issues with the loan: you’ve just cost your clients and those on the other side of the table, both time and money. This is especially true over a holiday weekend. Save yourself and all other parties involved some grief and just close on a Wednesday!
5. Turn in the PA, closing information sheet with client contact information ASAP. When it’s not completed, it causes more back and forth delays in obtaining this information. If you are not good at fine-tuning the paperwork, maybe contract out this work because in the long run, you could probably have more business done by focusing on what you do best, which is selling.
When trying to ensure a perfect and well-orchestrated closing, keep these things in mind. Most importantly, have all paperwork completely filled out in a timely fashion and communicate with your clients that their immediate attention to the required items will keep the closing on track. Also, please be considerate to your lender and title service by choosing a closing day other than the 15th or the last Friday of the month. Choosing another day will lessen the rushed feeling for your clients and for everyone else involved. In doing this, you’ll be able to have your closer of choice available to service your clients’ needs and funding loans will be less of an event, since the lender will have more time to dedicate to the file. Your clients will thank you.