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Typically, buyers seeking to purchase a home want to move in as quickly as possible. According to Ellie Mae, a software company that processes mortgage applications, buyers typically get discouraged when they learn that the average time to close on a property is 50 days. However, real estate attorneys can help buyers and sellers shorten the real estate closing timeframe. Below are some tips on how the process can meet buyers’ and sellers’ expectations when purchasing and selling a home.
Don’t Delay Retaining a Real Estate Attorney. Real estate attorneys should be involved before problems arise. For example, a common question prospective clients ask is, “I want to get out of a contract I signed, what can you do for me?” The attorney should have been involved before this problem came up, not after the fact.
Avoiding problems early on is worth the cost of hiring an attorney. For example, if you purchase a home without hiring an attorney and a tax lien goes undiscovered. Now, as the homeowner, you are on the hook for several thousands of dollars in old tax debt and face the risk of foreclosure. Therefore, contacting an attorney from the outset is a safe way to speed up real estate closings and to avoid problems during the closing process. It is important that you are open with your attorney and that your attorney is responsive to your needs.
Schedule an early closing. Set the date of the closing a few weeks ahead of any deadlines you may have. By doing so, if something goes wrong and you have to extend the deadline, you will be fine. Waiting until the last minute to close may result in having to wait for the title companies and lenders, in turn delaying the closing. Include this date in the contract. In New York, the closing date in a contract for the sale of a home is basically a target date for the closing, not a hard-and-fast deadline.
Consider waiving contingencies. Contingency clauses set forth a condition or action that must be met for a real estate contract to become binding. Common contingencies involve appraisals, financing and inspections. These clauses are notorious for delays, but buyers and sellers may weigh whether or not to give them up. Some contingencies are worth fighting for, but buyers are encouraged to consider whether they will suffer from buyer’s remorse or financial trouble if the contingencies are waived. An experienced real estate attorney will help buyers and sellers identify which contingencies are important for the transaction.
Have the paperwork in order. Buyers are encouraged to keep at least three months of bank statements, pay stubs, and letters of explanation in connection with unusual expenses or financial gifts that will be applied toward a down payment. Even when buyers have a pre-approval, they need paperwork in order to finalize the transaction, and having it up front could save time. Typically, the process is held up when paperwork and certain information is not readily available.
Obtain a preliminary title report. A preliminary title report will show if an individual other than the seller has a legal claim on the property. Typically, the report is received within a few days of reaching mutual acceptance with the seller. Be sure to review it without delay. You only will have a few days to review and approve it. If problems are discovered on the title report that cannot be cleared up, the buyer can invoke his/her title contingency to back out. However, the buyer must respond within the review period.
Look for issues on the title report. Such issues include: liens (a legal claim of ownership listed on the title of the home); easements (a right to use another person’s land for a specific purpose); and encroachments (fences or other parts of neighboring lots that cross property lines).
Promptly ensure the title is clear. In order to close a transaction, a title analysis must be conducted. A clear title is one with no issues, such as easements. A marketable title may have easements or other issues, which are not considered conflicts of ownership. A contract may only give the right to a marketable title; the buyer may be obligated to purchase a home where he/she is forced to provide land access to a neighbor, or where you are prohibited from building in a way that obstructs your neighbor’s view. Before making an offer, be sure to discuss the title review with an attorney. If any issues are found, it would have to be cleared before the transaction could close.
These tips are not exhaustive. We recommend that buyers and sellers consider utilizing some of these tips during their closing process. Our firm is available to assist you in facilitating these issues so that the closing can go smoothly and efficiently while protecting your interests.