Temps are up, interest rates are down, and the real estate market is bouncing back.
Summertime is here, and with it 5 tips for making even the most ordinary closing extraordinary!
1. Provide as much information as possible when the order is placed.
- Online ordering on Land Title’s website makes it easy to provide all of the information the closer needs at the beginning of the transaction.
- Land Title needs a signed copy of the contract and any addendums or extensions, which can be dropped off, emailed, or uploaded electronically through Land Title’s online ordering system. Closing instructions signed by the seller, buyer, and listing agent should be included as well.
- Don’t forget to provide full names, addresses, phone numbers, email addresses for all parties to the transaction. The closer will also need information on current loans: lender name, account number, telephone number, and seller’s social security number. For the new loan, provide the name and phone number of the new lender, the loan type, and the loan amount, when known.
- Other information the closer will need includes name and number of water and sewer districts; the name of the Homeowners’ Association and sub-associations, plus a contact name and phone number for each; and the inspection resolutions as soon as they are signed.
- If you would like the closer to order Homeowners’ Association documents, please let Land Title know at the time you place your order. This will give the closer time to meet the contract deadline.
- Will all buyers/borrowers and all sellers be attending the closing? If not, please notify the closer as soon as possible and allow a minimum of 7 days prior to closing for signing and returning documentation. Sellers and buyers out of the U.S. will need to follow additional procedures for signing and notarizing documents, which may delay the closing.
- Does the seller have a bank account in the name in which they hold title? Proceeds must be made payable to the seller as the seller holds title, so sellers may want to make sure up front they have an account where they can deposit the proceeds. For example, if the property is held by John Donovan Trust or an entity called Donovan LLC, the proceeds cannot be made payable to John Donovan as an individual, so the entity will need to establish a bank account prior to closing in order to deposit the proceeds.
2. Schedule strategically.
- Closings with FHA payoffs should be scheduled prior to the last day of the month. If lender funds are not received on the day of payoff, an additional month’s interest could be due to the payoff lender. If the seller has a mortgage in existence, you could save your client money by not closing on a Friday. If the weekend delays receipt of the payoff funds, the seller could pay three days of additional interest.
- Because of the high volume of closings at month-end and on Fridays, you may have a more enjoyable closing (and have more options for scheduling) if you choose to close earlier in the month or mid-week.
- Because most money is wired for a closing, it is not an instantaneous transfer but the money must negotiate its way through the Federal Reserve Bank system. Like the real estate industry, the Federal Reserve Bank system experiences times of increased volume, which can slow down the wire transfer process. These periods of increased volume occur on Fridays and also at month-end. By scheduling at other times, you can avoid the Federal Reserve slowdown.
- When the lender wires money, it’s not just a keystroke but a 3-4 hour process. For example, if funds are wired at 2:00 for a 3:00 closing, there is a chance that the transaction will not fund that day. Also, a Federal Reserve reference number does not mean the funds are available for closing; by law, Colorado title companies must have physical funds in the bank in order to disburse.
3. Perfect your payoff strategy.
- One of the title company’s procedures when a new order is processed is to obtain payoff information for any existing loans. If the information does not come in at the time of order, Land Title contacts the listing agent for the name of the lender, the lender’s phone number, and the loan number(s).
- Many lenders require borrowers’ written authorization to release payoff information. Land Title can supply these forms to agents upon request. The payoff statement should be addressed directly to the title company.
4. Communicate clearly… and then communicate some more.
- Read the commitment and question any portion that is not clear or understood!
- Suggest that seller and buyer review draft documents (such as the deed) prior to closing. You may also want to explain the Real Property Transfer Declaration to your customers before closing so they have a thorough understanding of it. These simple steps will save time at the closing table.
- Notify closers ahead of time if you will need cashier’s checks at closing.
- If the seller is an out-of-state investor, inform them of Colorado’s 2% tax withholding rule and notify the closer so the amount, if applicable, can be included in the figures.
- Please let your closer know ahead of time if you have any special needs at closing: interpreters, blind or deaf clients, or if there is a divorce situation that would require two separate closing rooms, for example.
- Remind buyers and sellers to be on time. It sounds simplistic, but even a 15-minute delay can affect other closings throughout the day.
5. Remind your clients what to bring to closing.
- All buyers and sellers must bring a current driver’s license or picture ID issued by the state, or a valid passport. If there has been a change in marital status, the party whose name has changed should bring a driver’s license reflecting the new name, as well as a marriage license or divorce decree documenting the change.
- Colorado law requires buyers to bring good funds to closing. Good funds can be a cashier’s check or wire. Most buyers now use wires as good funds. On cash transactions, Land Title requires wired funds from the buyer. Money orders and Western Union transfers are not considered good funds. Land Title does not accept cash over $500 for employee safety reasons.
- Buyers and sellers need to know their Social Security number (or TIN for entities) to complete IRS documents at the closing table.
- The seller can bring extra house keys, garage door openers, security gate keys, etc. to give to the buyer. (Operating guides, warranty materials for appliances, wallpaper, paint, and other household items that stay with the house can be left on the property.)
- If your sellers had an FHA loan paid off at closing, they can call HUD at 1-800-697-6967 to see if they are eligible for a partial refund of their original mortgage insurance premium.