Watch Out for Date Requirements!

An agreement of sale for the purchase of real estate contains multiple dates that you need to keep track of to make sure that your deal gets done. It is very disappointing when a purchase of a property does not close or the buyer does not get the best deal possible because the buyer did not comply with the date requirements in a typical closing process.

Initially, it is very important for the borrower to keep track of the dates by when inspections and appraisals have to be done. This is your chance to truly assess the property and discover defects that might not have been apparent by the buyer’s visual inspection only. We have seen cases where the buyer did not get the inspections done on time and therefore did not timely notify the seller of defects or issues that needed to be addressed. In such a case, the buyer loses the opportunity to negotiate a better price, or to cancel the contract without losing their deposit.

In addition, if the contract contains a mortgage contingency date, you must make sure that it has its financing in place before that date arrives. Similarly to the inspection deadline, if the buyer does not timely notify the seller that it has not secured the needed mortgage by the contingency date, the buyer may not have the funds to close and may lose the deposit.

Every lender, including RFG, will require that hazard and liability insurance be purchased naming the lender as beneficiary before it will fund a loan. Make sure that your insurance is in place before the closing date, as you will not be able to close without it. Flood insurance will also be needed if the property is located in a flood zone. Be aware that flood insurance can take a week or more to process, so start working on it well before the closing date.

It is the buyer’s responsibility to order a title report and schedule the closing. Title companies often require a few weeks to process a title and prepare for a closing, so the buyer must make sure to notify their title company of the transaction, provide accurate information on the property and get the closing scheduled on or before the settlement date on the contract. Frequently, things go wrong with closings and they have to be delayed, so it is our recommendation that closing be scheduled a few days before the final date on the agreement of sale so if the closing has to be postponed, the buyer is not at the mercy of the seller in requesting an extension.

Lastly, the closing date is on the contract for a reason. Seller’s do not like holding onto properties longer than they need to and may continue to entertain offers on a property even while under contract. We have frequently seen buyers be very casual about preparing for closing, assuming that they will be able to get an extension from the seller, only to find out that the seller has a better backup offer and will not give the expected extension. In that case, the buyer who has extended considerable time and money on the purchase is unable to complete the deal.

Immediately after signing an agreement of sale, make yourself a calendar so you can keep track of your dates. By doing so you can get the best deal possible and not be left empty handed.

Call us to discuss your next purchase!