Last month, we looked at some common issues that delay a closing on the side of the purchaser. Now, we focus on the seller side of the transaction.
- Overpricing your home. A lot of sellers are trying to take advantage of the market and aren’t being realistic when it comes to the pricing of their home. Choose a good real estate agent who knows the area and can find the proper comps to create a price that works. Listen to them and figure out a bottom line offer you are willing to accept. If you get too fixated on the asking price, and don’t leave room for negotiations, you could lose really great buyers and your house will be on the market for a lot longer (think extra carrying costs.)
- Open prior mortgages. Before you list your home, I recommend you go to your County Clerk or City Registrar and confirm whether any mortgages you may have paid off in the past (think refinances) have been properly satisfied on record. Even though the prior owner of your home paid off their mortgage, or you refinanced at some point, the lender may have failed to properly record the satisfaction of that mortgage with the County Clerk or City Registrar. When you sell, you have an obligation to transfer to your purchaser “title, free and clear” and an unsatisfied mortgage is a cloud on title. It may take a couple of months to resolve these open issues so doing it in advance of listing is key. Your title insurance policy from when you purchased will help resolve any open mortgages from the prior owner.
- Lack of certificate of occupancy (CO.) This could be that garage conversion or addition you did years ago, the swimming pool and deck you updated, the shed you built, etc. If you decide not to get the CO, the purchaser has to know before they make an offer on the house. It could affect the purchase price or the mortgageability. If there is an open permit for an addition or a garage, some banks will not close until the permit is closed out and a CO is issued. Again, this could add months to the process.
- A home equity line of credit (aka HELOC.) This is actually a mortgage recorded with the County Clerk and even if the balance is zero, you need a payoff letter right before closing to release the lien. This is important because the account would be frozen and you wouldn’t be able to access it or write out checks before closing.
- Missing documents. In order for me to prepare a contract of sale, I need a copy of your deed and title policy from when you bought your home. I would also like to see your survey and CO’s – if you have them. While these aren’t needed at contract signing, if you have them it helps the transaction go quicker. Let’s say there’s a fence on someone else’s property and you are able to provide the boundary line agreement with your neighbor in advance. That is a huge time saver. The survey is usually the last thing to come in, so the more you know and can prepare, the better.
- Problems at the final walk through. Make sure your home is in good condition before the purchaser does the final walk through. While it is subject to reasonable wear and tear, the appliances, plumbing, electrical and HVAC systems will all need to be in working order and your roof must be free of all leaks.
- For Sale By Owner problems. When you take on the sale of your home on your own, you are responsible for confirming the offer, ensuring proof of funds and the pre-qualification of the purchaser. You will be speaking with the loan officer and figuring out if this purchaser is the right one for your home. It’s a lot to have on your plate, so weigh the pros and cons of working with a professional versus doing this yourself.