Closing Day Issues And How To Avoid Them

Kevin Guerrero
Published on May 23, 2016

Closing Day Issues And How To Avoid Them


Purchasing a home for the first time can be a daunting experience, and closing day is perhaps the most daunting part of the buying process. Knowing in advance the issues that can pop up will help avoid them. While some issues can be easily solved, others can derail a deal at the final hurdle.

Disheartening walk-through surprises

The final walk-through of the property is the number one cause of unexpected issues on closing day. The final inspection takes place the day before, or during the morning of, closing day, leaving the buyer with little time to prepare and react to potential problems.

A heavy storm may reveal downstairs flooding, or the furniture that you thought was included has vanished. Cracks in the ceiling or walls may be revealed.

If the issue is a serious problem you should take careful steps in proceeding with the deal. To avoid any unfortunate revelations, you should have very thorough inspections of the property before the final walk-through prior to closing day. And also should be very specific about inclusions and exclusions in the Colorado Contract To Buy/Sell. Don’t assume anything, get it in writing to reduce the chance of closing day issues.

Feel free to ask the current owner to view the property after a large storm to inspect for any damp or potential flooding. Discovering a last minute problem does not necessarily mean the deal should be compromised. Negotiate to have the cost of repairs covered by the seller, and have the money put in escrow. Get estimates from professionals to verify how much the repairs will cost. In Colorado, the seller must repair any damage (of not more than 10% of purchase price) prior to closing. The buyer has the right to terminate the contract if repairs are not completed prior to closing or if the cost of the repairs exceed 10% of the purchase price. There are other options that are negotiable. Here’s the exact text of the Colorado Contract:

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What the seller takes with them

A common issue on closing day is confusion between the buyer and seller over which items are taken by the seller and which items remain with the property. Perhaps you liked the antique furniture at the property and were disappointed to discover it had disappeared on closing day. Was it specified in the Colorado Contract to Buy/Sell? Generally speaking, those items that are not “attached” to the property or considered “fixtures” are personal property. Specify what you would like the seller to leave behind in the offer to buy.

Unless you’re extremely attached to an item and regard it as a deal breaker, it is often best to let go any issues over the transfer of personal property. The simplest solution to any misunderstanding on closing day is to state in the contract what is expected to remain or must be removed. Be detailed and make sure that the contract matches what you expect to be in the property on closing day. But in some cases the lender will not allow items of personal property to be included in the contract. Home loans are intended to finance real property, not personal property. If you’re unclear of the difference, check out this article. Negotiate with the seller and then transfer any personal property items via bill of sale.

Credit issues

Most buyers obtain home loan approval well before closing day. However, slight changes to your financial situation can alter your credit rating and problems can occur right up to the point of closing on the deal. If you change your job, apply for a credit card or car loan, fail to make payments or bills, even an unexpected influx of cash can cause issues with loan approval.

If the lender backs out of the deal, you will have to find another home loan provider before you can close. The lender may adjust the interest rate and you will have to reconsider whether the property is still affordable.

To avoid any closing issues, you should communicate with the lender several days before closing to ensure there are no issues, and resolve any if there are. It’s advisable to avoid any large financial moves in the month or so before closing, like changes to your employment or any financial influx from a relative or family member.

Money transfer problems

The crucial part of closing day is the transfer of funds. Some banks and financial institutions prefer to conduct transfers electronically, while others prefer certified checks. If you bring the wrong paperwork or make a mistake with account numbers, you can delay the deal.

While not to serious, it is best to avoid creating any unnecessary stress. Ask your lender to and real estate agent what type of transfer is required.

Title issues

A title company will reveal details of the property, such as any liens, covenants, and past ownership, that can reveal serious issues on closing day. Give yourself time to consider any issues or stipulations that come with the property. Any tax owed on the property or claims of ownership from family members or co-owners can delay closing. In Colorado, title issues are usually resolved well before closing.

Read more: Contract to Closing…what happens after you have an accepted contract.


About the author:  The above article “Thinking of Moving to Colorado Springs? 7 Reasons Why You Should” was provided by Kevin Guerrero of Keller Williams Clients’ Choice Realty. To find out more about Kevin and Keller Williams check out the ABOUT US page.

To get a complimentary home valuation click HERE.

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Closing Day Issues And How To Avoid Them
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