A recent report revealed that, in the past couple of years, there has been an increase in the number of real estate transactions that have fallen through prior to closing. While there are a number of different reasons real estate transactions fail to close, there are proactive measures home buyers can take to help ensure a successful purchase.
Trulia found that in 2015, 2.1 percent of homes went from “sale pending” to “for sale” status, failing to reach closing. In 2016, the failed rate of real estate transactions doubled to 4 percent. According to the report, these circumstances occurred more frequently with older and less expensive homes. Starter-homes accounted for 6.3 percent of sales that did not conclude. Homes that were built during the 1960s fell through more often than any other category.
From the information provided by Trulia’s report, it is reasonable to conclude that first-time home buyers often run into more unexpected problems than repeat buyers. Often, first-time home buyers run into real estate issues such as appraisal and home inspection results, mortgage applications, the inability to meet contingencies, or unclear titles. To help ensure that the purchase or sale of a home is likely to reach closing, there are a few helpful steps individuals may take such as managing finances, asking for a checklist, leaving plenty of time to close, and communicating with their lender.
Closing proceedings may be confusing, especially to first-time home buyers. An individual should request a checklist, from their lender to help keep track of the process. If a lender is unable to provide a checklist, he or she may access one on the Consumer Financial Protection Bureau’s website. Reviewing the checklist upfront, and knowing what is required, will help to alleviate problems in the future.
In terms of managing cash flow, proof of funds for a down payment and closing costs must be provided prior to the closing date. Considering this, large purchases should not be made during this time to ensure that enough money is present in a bank account. Furthermore, it is important to maintain a good credit score by being up-to-date on all bills. If you have unpaid credit cards, it is best to pay them off prior to beginning the process. An individual can check their credit report for free using online resources, such as Credit Karma.
Another tip to ensure the successful purchase of a home is to consistently communicate with the lender to eliminate any potential errors that could take place at the time of closing. An individual should contact their lender to make sure that he or she has all the proper documentation that is required for the day of closing. Additionally, if an agent is handling the process, it is essential to verify that he or she has obtained the necessary documentation. It is highly recommended that individuals leave time during the closing process to make sure that everything is in order. This will give them the opportunity to address any unforeseen issues that may arise.
By taking essential actions, planning ahead, and communicating with necessary individuals, purchasing a dream home can be a successful and more enjoyable experience. If you are looking to purchase a home, it is important to contact an experienced real estate attorney who can guide you through the process and protect your legal rights. For more information about our real estate law practice, contact AGMB at 310-300-2900 for the Los Angeles real estate law office, or 212-201-1170 for the New York real estate law office.
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