brromfield_Charlie-Glahe.jpg
Charlie Glahe WIN Broomfield

The art of the closing process

The-closing-process-and-baseball-offer-some-similarities-_1137_40072973_0_14089479_5003

In all of sports, the stretch run is a phrase commonly heard. This term is used to describe the portion of games remaining in the regular season before the playoffs start. Postseason-bound teams try not to let up during this run, as losses can cost them home-field advantage. In some instances, they may miss out on the playoffs entirely after being passed over by a team playing better and more confidently during the stretch run.

In the real estate market, the stretch run also applies. Closing on a home may seem like a done deal, but at the last minute, lenders, agents, homebuyers or sellers may hit a snag and everything derails. For a baseball comparison, in 2011, the Boston Red Sox held a nine game lead heading into September. They were supposedly a lock for the postseason, until they lost 20 games in the final month and missed out on the playoffs.

Buyers, sellers and brokers: Here's how you can avoid your best 2011 Red Sox impersonation when it comes to halts in the closing process.

Prepare for the unexpected
You know the cliché, prepare for the unexpected? Just ask the 2007 New York Mets, another team that collapsed in late September. Only this time, they weren't expecting their ace pitchers to falter in crucial situations.

Preparing for the unexpected applies to deadline deals. According to an article by Brendon DeSimone for popular real estate service Zillow, sellers may not move out in time, thus creating issues. Likewise, brokers and homebuyers need to stay informed of repairs that are supposed to be made. To ensure you, as the homebuyer, and the agent aren't caught off guard, set deadlines for any repairs. A tight schedule helps keep everything on schedule, no matter if the house will be undergoing minor or major repairs. As soon as these repairs are completed, a home inspection company needs to come out to make sure everything is safe. 

DeSimone recommended completing any work one week before closing and having it in writing. This acts as a fallback option if disagreements arise.

Maintain constant communication
If you're a homebuyer, you should get used to calling, texting and emailing your real estate agent and mortgage lender. Mold your communications after base runners, as the slightest slip can lead them into a base running miscue.

Everyone understands that buying a house involves huge amounts of effort on both sides, and constantly communicating with a lender will help avoid any misinformation. Massive amounts of paperwork are involved. Bankrate.com noted mortgage lenders typically require the following forms of documentation:

  • W2
  • Recent paycheck stubs
  • Canceled rent or mortgage checks
  • List of all assets
  • Profit and loss statements
  • Listing of all debts, including student loans, credit cards and child support

Due to this amount of paperwork, you may find the lender needing the same information quite often. While it may seem redundant, you'll do more harm than good by delaying passing along any of the requested information. Something as seemingly small as one missing signature can delay a closing. Another unintended side effect of closing delays is an increase in your mortgage rate.

After you have agreed to a contract, your real estate agent should ideally check in with all parties at least twice a week, as recommended by DeSimone. As the homebuyer, you can schedule a few minutes out of your day to contact your agent to talk over the details, as well as remind him or her to check with other involved parties. An open line of communication will help everyone spot potential problems before they worsen.

Don't spend too much money
The last holdup of the closing process may be the most difficult to avoid. Numerous baseball players have gone through financial hardships following their playing careers because they overspent. For homebuyers, realize that the housing market collapse in 2008 resulted in tighter lending regulations, and as a result, major lifestyle changes may affect your chances of owning a house.

According to The Guardian, lenders want to see stability in your life. This means a consistent source of income and no major purchases. Even having a child may lead to some hesitance from lenders. Likewise, major purchases made between signing the deal and closing will also have consequences. Even though you may be tempted to buy a new car, you'll benefit from holding off on the purchase until you're all settled in.

However, something drastic may occur without any warning. If this happens, you should contact all parties to inform them. This will not only keep everyone up to date, but also will help you develop a plan to handle the potential issue.

Before you even begin looking at houses, you need to realize the process is time consuming. As best as you may try to lock everything in place, be prepared for the unexpected, especially during the closing process. Everyone needs to stay in contact with each other to ensure the closing process moves forward.