Everyone makes mistakes. But, in real estate, sometimes the wrong move can mean the difference between becoming a homeowner and losing out on the property that was meant for you. With that in mind, we’ve brought you three surprisingly common closing mistakes to avoid when you’re about to buy a home.
These are the things that trip buyers up most often and can cause huge problems in a transaction. Here's what to consider when you're going into a deal:
1. Not sticking to your closing timeline
The secret to successfully closing a real estate deal comes down to one thing: doing what you say you’re going to do, when you say you’re going to do it.
Luckily, your purchase agreement essentially functions as one large timeline that outlines exactly what needs to happen -- and when -- in order to keep the transaction moving forward.
As the buyer, you’ll want to keep a close eye on these deadlines, which can account for things like your inspection deadlines and dates for securing your house financing. If you don’t, you could be found in breach of contract, which if the deal goes sour, could result in the sellers keeping your hard-earned earnest money deposit.
The best way to stay on top all these dates is to create a timeline of your own.
Once the deal is official, sit down and read through the purchase contract carefully. Make note of any important dates, as well as what needs to happen on each one. If you are buying a home with Open Listings, a closing timeline will automatically appear in your Offers dashboard.
2. Forgetting to follow up
While we’re on the subject of meeting deadlines, it’s crucial to realize that you’re not the only one following them. Everyone, from the home inspector to your mortgage loan officer, is responsible for doing their part (and on time) to help you fulfill your contractual obligation. That said,dsometimes even the most crucial deadlines can be forgotten about -- which is why you should never be afraid to follow up.
Let’s say, for instance, that you have a total of 14 days to do your inspections. In that time, you need to get on the inspection company’s schedule; they need to come out to inspect the house; and you’ll need to give them time to generate a report. Then, you’ll need to read over the report carefully and submit a list of negotiable repairs for the sellers’ approval.
So, what happens if, by day 11, you don’t have the report in hand?
Don't be afraid to be the squeaky wheel. It's well within your rights to follow up with the inspector. The same is true for your mortgage rep, appraiser, and even the agent you’re working with.
If a deadline is fast approaching and you haven’t received an update in a while, don’t just sit back and wait. Follow up on it and get answers.
As with any business situation, you’ll want to be polite and courteous, but making sure you close the deal on time is your responsibility, too. After all, you're the only one who'll end up with a house at the end of this process.
3. Making big purchases during the escrow period
This is a big one. We see so many buyers, especially first-timers who are so excited about their new home that they run out and start buying furniture for their new place. Little do they know that doing so could actually be the thing that ruins their chances at homeownership -- or at least delays them for a while.
The reason for this is because applying for a mortgage and even getting pre-approved for one isn’t a guarantee that you’ll actually receive one.
After the lender receives your application, you have to go through a process called underwriting, where the bank vets your finances to ensure that you can handle your proposed mortgage payments.
Running out and making big purchases like furniture is a red flag, especially if you’ve made the purchase via credit card and it changes your debt-to-income ratio. To avoid this situation, the best thing you can do is keep your financial situation as stable as possible.
Don’t change jobs or splurge on any big-ticket items. Don’t even pay off any of your major debts without consulting your mortgage professional first. At this point, any big financial maneuvers need to be properly documented and this is one instance where it’s much better to be safe than sorry.