A Realtor’s Guide to Closing Quickly
Paige A. Mitchell
San Francisco, a city like no other. Native San Franciscans love their city’s outdoor adventures, world class cuisine, mild climate, phenomenal arts scene, and booming tech industry. It’s no wonder that everyone wants to live here, except for the fact that the median cost of a home is over half a million dollars and the housing market is one of the most competitive in the nation. Competition will affect every stage of the home buying process, even through closing. Savvy real estate agents must be aware of how they can ensure the best close on a home sale that will leave everyone happy, especially the new homeowners.
Anticipate and prepare
While there are laws, requirements and procedures that govern all major real estate transactions, there are, of course, the inevitable unknowns—Murphy’s law and the “human” factor. Much of real estate happens on paper but it also involves critical face-to-face interactions between buyer and seller, attorneys, mortgage loan officers, title companies and real estate agents, as well as their various stakeholders, all of whom can derail a real estate transaction.
A 2015 survey by The National Association of Realtors revealed that nearly a third of closings are delayed, and 6% of those deals fall through completely. Given this alarming statistic, it is important to anticipate and prepare for the most common issues that arise in closing. Traditional wisdom suggests that 90% of success is preparation. Those real estate agents who are organized and prepared are often equipped to either prevent disaster at closing or can manage the “snafus” that arise with more aplomb.
The most common issues that can deter a quick close include financing problems, home inspection complications, issues with the contract, mistrust between buyer and seller, and security breaches. Makeitbetter.net states that problems in financing account for about 50% of the delays in real estate transactions and typically it’s due to a problem with the buyer’s mortgage. If your client is the buyer, it’s important that you help them stay on top of the mortgage process by keeping them abreast of deadlines, helping them gather and forward appropriate documentation to all relevant parties, and ensuring that all financial transactions prior to the closing clear the bank on time.
Another common reason for delay is the final walk-through. Parties may not have fully agreed on what stays in or goes in the house between the buyer and seller and problems with the house are sometimes not revealed until the final walk-through. If there’s damage that has been missed, the buyer can ask the seller to cover the costs of the repair before close.
Fortunately, agents can take measures to prevent this ahead of time. First by ensuring that home inspections are thorough and scheduled early on in the process. This gives sellers time to make repairs. Agents should also educate themselves and their clients on what to look for each time they visit the house. This will help clients understand what stays and what doesn’t and what to expect in that final walk-through. Sellers can then sell the house without a bathroom mirror or appliance holding them up, and buyers won’t have to invest even more money after the purchase to make significant repairs.
That being said, it pays to help the seller get the home ready to sell. Homeowners should always consider that their property, often their most important and valuable asset, will most likely be sold at some point and ongoing maintenance, modernization, and beautification is necessary to helping the property hold its value, particularly in such a competitive market like San Francisco.
Agents can give a monthly home checklist to sellers to help them prepare their home for resale several months ahead of time. Additionally, encourage clients to include a home warranty in their offer. Home warranties are not only helpful in streamlining home repairs while a house is on the market, but they can also be excellent marketing tools. Offering a one-year home protection plan works wonders to ease the mind of anxious buyers while building trust and goodwill.
In our increasingly digital world—especially in Silicon Valley—cybersecurity threats have made their way to real estate. Emails are hacked, large sums of cash are tracked, and fake emails can be sent to buyers requesting that they wire their down payment. Real estate agents should work vociferously to educate their staff and their clients about the best practices for maintaining security, like sending financial information via email. Wire transfer information should be given in-person or over the phone if possible and cybersecurity measures should be implemented at all stages of the sale to protect both the buyer and the seller in the process.
No matter how well we prepare the paperwork and the property, nothing can stop a sale like human psychology. MoneySense states that it’s important to understand the ways in which realtors make sales and money off their clients, and furthermore, clients should choose a realtor who will use psychology effectively in negotiations without crossing ethical lines. A good realtor who does not want a difficult close will seek to create a constructive working relationship with goodwill and trust between the buyer and seller. Effective real estate agents should act as trusted advisors who put their clients’ interests before their own, they should listen closely, communicate regularly and be an active problem solver.
Every good realtor knows that each home sale is a complex transaction involving multiple stakeholders, many moving parts and a lot of human emotion. With effective preparation and organization, excellent communication, trust-building and negotiation skills, and a keen awareness of the common and potential pitfalls of real estate closings, realtors will successfully navigate any closing with success.