LAST MINUTE HICCUPS...!
In our own experience, and also through our discussions with fellow Realtors, it appears that recently about 8 out of 10 purchase transactions have had "last minute" surprises that may have delayed or upset the closing in some shape or form.
Normally, these "hiccups" are due to the financing. Underwriters (and transaction auditors, a second "firewall" established recently by a few large banks) are under the gun and are checking and re-checking all loan applications with a fine tooth comb SEVERAL TIMES.
Due to either the lenders' understaffing or lack of adequate systems, these hiccups tend to surface within a few days before the closing (it is not unusual to see problems appear with the underwriting of a loan the day before the closing!). This is just plain ridiculous, given that the lender has had access to the file and all the infomation for weeks! But there you have it, we have to deal with this new "market condition", since it is happening often...
As professional Realtors, we now prepare our clients for the worst and hope for the best:
- The CLOSING DATE is just a TARGET date. It is no longer a certainty. Do not arrange moving vans or disconnect utilities assuming it is a given. "Time is of the essence" in a real estate contract does no longer mean much, since loan approval and disbursement are now unpredictable at best. The lender has all the power now, and neither buyer, seller, agents, attorneys or the loan officer have any control anymore...
- Have a CONTINGENCY PLAN in place. What are you going to do if the closing is delayed for 1, 2 or 5 days through no fault of either party?
- Be prepared to go to a closing and experience a DRY CLOSING (where all the documents are signed but the money from the lender does not arrive, even if it has been authorized). Normally these transactions fund within a day or two, and it is wise to have the closing attorney keep all keys and documents until the money arrives and the transaction is finalized in full.
- Buyers need to look beyond just interest rates and closing costs when choosing a lender. Underwriting processes and closing performance are now important factors to consider! When CHOOSING A LENDER - ask closing attorneys (or their paralegals) about their REPUTATION. Who are the lenders or brokers who CONSISTENTLY approve loans on time, and send their loan packages to them with sufficient anticipation? This must be a performance factor that should weigh in heavily, especially if timing is critical for your move!!
We strive to make real estate transactions as smooth and predictable for our clients as possible. Keeping clients up to date with the latest industry trends and developments is one way we can help. If you are thinking of buying or selling a home, please give us a call at 843-416-1434.