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How to avoid closing-day glitches

After months of hunting and preparation, you're finally ready to close on a house. The last thing you want is to have a problem pop up and delay the closing. Watch out for these common closing-day glitches, and learn how to avoid them. 

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1. Walk-through shockers
When you're buying a home, one of the last steps of the process is to conduct a final walk-through of the property. These walk-throughs are usually scheduled the morning of or the day before closing -- after the seller's furniture and artwork has been removed -- to verify that the new home is clean and in move-in condition. However, sometimes buyers receive surprises when they see what's behind the decor: faded floors, holes in walls or dirty rooms that can make a buyer balk at going through with the closing.

7 closing-day glitches

"I had an experience where on a walk-through we discovered that the flooring the owner advertised as ceramic tile really wasn't. It was a ceramic-looking design that was actually laminate," says Joyce Rhodes, a Realtor with Coldwell Banker Residential Brokerage in St. Charles, Ill. The buyer complained and the closing was delayed until the seller offered the buyer a credit to pay for installing real ceramic tile. "In general, a credit can go a long way to fixing any problem. The buyer and seller just have to negotiate how much money is needed for the repair," says Rhodes.

2. Not enough cash to seal the deal
"A buyer, particularly a first-time buyer, could discover at the last minute that they don't have enough money to pay closing costs," says Alan Weinberger, a professor of law at Saint Louis University Law School in Missouri. "Even with a modest house those costs can run into the thousands of dollars for title insurance, recording fees, etc."

"We try to put together the final settlement statement within 24 hours of closing," says Leah McCann, a loan officer with First Horizon Home Loans in Fort Myers, Fla. Up to that point, the buyer has only an estimate of the fees they need to pay at closing. "Because of prorations and title fees, the final amount may be a few hundred dollars more than what's noted in the good-faith estimate, but the buyer still has to provide those funds in order to close."

"At that point, all eyes are on the lender" to see if they will lower their fees enough to let the buyer go through with the closing, says Weinberger.

McCann concedes that sometimes lenders have to be willing to do just that. "Nobody wants to lose a deal over a couple hundred dollars."

Even if the funds are available, they may not be in the right form.

"If a seller needs the funds from the purchase of one house in order to buy another, they may be expecting a wire transfer of the purchase price into their account. If the lender provides only a check, then they have to wait for it to be deposited," says Alan Gottlieb, vice president and special counsel for First American Title Insurance, in Philadelphia. "If they need that money for a subsequent funding, then they should make amends for a wire transfer."

Even if a wire transfer isn't necessary, funds need to be guaranteed. "We often see people who don't bring certified or bank checks to a closing," says Gottlieb, and that could cause a delay.

 
 
Next: "If the seller waits until the last minute ..."
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