Congratulation on your purchase contract! A job well done on being masters of HGTV staging, landscaping pros, and social media sellers. It is now time to relax and coast to closing. Right?
A lot of buyers and sellers feel it's now okay to ease up, and all that's needed is paperwork for the lender, and frequent communication from your realtor that everything is rolling smoothly. But as any realtor will tell you- now is when the difficulty or success begins (it's all how you look at it).
Whether you're a seller or a buyer, there are a number of items that need to fall into place in order to have a smooth, successful closing. But what are those items? I've come up with a list that I've used over the years here in Charleston that I hope you'll find useful if you are a seller, a buyer, and even for a For Sale By Owner.
Here's the list. I have included a list for buyers and then sellers below that. Let me know in the comments section below if you have any questions along the way:
Buyers: CONGRATULATIONS ON YOUR “PURCHASE CONTRACT”…NOW WHAT?
/ / : Arrange loan applications on or before loan application deadline (see contract)
*Take your checkbook – You will pay for credit check (approx. $75, non-refundable)You will pay for appraisal (approx. $550) (non-refundable) (Note 1)*Incur no additional debt prior to closing*Do not change employment status
/ / : Arrange home inspection before deadline (see contract) (Note 6 ) Use a licensed home inspector.
*This is not a “cosmetic” inspection, but a material deficiency inspection of items not obvious on pre-contract walk-through. Ask your inspector to address known defective materials including but not limited to:(1) Defective Hardboard siding—www.sidingclaims.com(2) Synthetic stucco/EIFS finish(3) Polybutylene plumbing systems(4) Defective copper piping noted in many homes in the Summerville area (15-25 yrs.old)(5) The existence of “Mold” (see www.epa.gov/iaq)
*Identification and/or evaluation of these materials is beyond the expertise of your realtor.
**YOU MUST HEAR BACK ON ALL REPAIRS FROM SELLER PRIOR TO DUE DILIGENCE EXPIRATION. If due diligence expires and you have not heard back from seller whether they are willing to do the repairs, you agree to purchase the house in as-is condition.
/ / : Deliver repair request list to agent prior to deadline (see contract) (Note 2)
/ / : Complete loan process = provide seller final loan approval notification.
/ / : Acquire home owner’s insurance policy within 2 weeks of closing and provide information to closing attorney.
/ / : Co-ordinate and set actual closing date and time with closing attorney. (Note 4)
/ / : Complete final walk-through 48 hours prior to closing (heating/air, appliance, plumbing, repairs, etc.) Date (Note, 5,7)
/ / : Bring certified check to closing for Buyer’s cost (This amount will be provided by the closing attorney.)
/ / : Call to have utilities transferred into your name as of the date of closing, or the date you plan to take occupancy. (Note 4)
/ / : Review HUD (a.k.a. Settlement statement) prior to closing and Bring certified check made payable to the closing attorney..
(1) Missing loan application date may result in Buyer default and/or loss of earnest money. If Seller is paying Buyer’s closing costs, Buyer will receive credit at closing for credit report and appraisal fees.
(2) Missing home inspection/repair list deadline will result in loss of ALL inspections rights, and you agree to buy the home in as-is condition. More on that here, due diligence.
(3) Repairs must be completed prior to closing; promised repairs after closing have a history of NOT getting done.
(4) Contract closing date is generally a target date, but the actual date and time is agreed upon by Buyer and Seller 48 – 72 hours after final loan approval.
(5) Real estate agents are NOT responsible for the quality of repairs or material condition of property. Buyer’s have the responsibility to obtain a reputable professional for material condition determination.
(6) Keep a copy of the ratified contract close at hand
(7) Never close without a clear termite report, current property survey, and all repairs completed & reinspected by your home inspector.
(8) Flood insurance is required on homes as identified by the flood certification attained by your Lender and the survey performed prior to closing. Your Realtor cannot make this determination.
(9) Property taxes may change without notice upon transfer to new owner. Consult your county auditor or closing attorney on issues such as non-transferable tax caps (Charleston County) or assessment changes. We are in a POS (Point of Sale) situation where the property owner's property will be re-assessed at the current sale price for the property.
(10) Termite Bonds may not be transferable and vary as to their coverage of repair and/or treatment.” Contact the provider prior to closing.” And review.
Sellers: WE HAVE A CONTRACT, NOW WHAT?
(1) Maintain your home condition (cosmetic and material) until closing.
(2) Continue to make your house payments unless directed otherwise by closing attorney.
(3) Do not turn off utilities until the day of closing. (Note 1, 6)
(4) Do not replace/change any appliances or fixtures without prior Buyer approval.
(5) Review Buyer’s inspection list, and arrange for repairs. (Note 2, 3)
(6) Present home to Lender’s Appraiser when notified.
(7) Arrange for repairs required by Appraiser . (Note 2, 3, 4)
(8) Arrange for CL-100 (a.k.a. Termite Letter) within 30 days of closing. Complete repairs required. (Note 5) More on CL100's
(9) Arrange for Buyer’s final walk-through 48 hours prior to closing and after you move out and final repairs are complete.
(10) Review Seller’s net prior to closing.
(1) Utilities are needed for Buyer’s inspection, some appraisals and final walkthru.
(2) YOU, the seller’s have agreed, to deliver the property with the heating, air conditioning, plumbing,, electrical systems and appliances to be conveyed in operative condition and to make the roof free of leaks and the dwelling structurally sound unless otherwise agreed in the contract
(3) ALL repairs must be complete prior to closing and conform to all code requirements.
(4) ALL lender repairs must be completed and reinspected for loan to be approved.
(5) ALL CL-100 repairs/treatments must be complete for loan to be approved. CL-100 reports expire after 30 days.(CL-100 repairs must be approved by a SC licensed contractor)
(6) The closing date on the contract is a target date. The actual closing date is set by the closing attorney 3 to 5 days after final loan approval.
(7) Buyer occupation prior to closing bears extreme risk on behalf of Seller. You should consider not managing such agreements.
(8) Non-resident Sellers will pay 7% state tax on equity, less improvement cost.
(9) Items identified by a licensed contractor/home inspector as a problem or potential problem must be updated on the seller disclosure on file. So… fix it now.
REMEMBER: “IT AIN’T OVER TILL ITS OVER” – Yogi Berra
Financial obligations made on a future closing always bear risk. Therefore, moving out, signing leases, contracting your next home should always be contingent upon the closing of your present home and never before final loan approval verified by the closing attorney.
Do you see anything that you'd like to add or change? Please mention so in the comments, so that I can improve on this list. Or- if you would like to ask questions on any of the processes above, please ask!
Mike Ciucci specializes in the Charleston SC real estate market. He has been a Charleston realtor for over 15 years, focusing on quality and attention to detail his clients have come to expect.