Residential real estate transactions involve many moving parts. Anyone who has gone through the process will remember a series of events that must happen in a specific order. On the Holmes-Stress Scale of difficult events in people’s lives, a mortgage ranks 20th, and moving is 32nd. We point that out because the common myth is that moving ranks much higher.
Residential real estate closings are manageable, but you must be proactive. Minor mistakes will cause delays, and significant ones will threaten the deal. Both buyers and sellers have responsibilities to fulfill and potential pitfalls to avoid. Understanding these common mistakes is essential for a smooth and successful closing.
From The Buyer’s Perspective
One of the easy traps people fall into is spending too much while they are in the home-buying process. Major purchases like cars, furniture, or appliances and getting new credit cards can affect your loan approval. These create red flags for lenders, potentially leading to higher interest rates, loan delays, or disqualification. Hold off on any significant financial changes until after the deal has closed to protect your loan terms (many people get eager to furnish their house and make this mistake by financing their furniture purchases).
Another common issue buyers face is failing to coordinate moving out with moving in. If you are renting, ensure your lease expiration properly interacts with your closing date. It pays to be proactive and think ahead because you could end up paying for two homes or needing temporary housing to fill the gap. Similarly, homeowners selling their property should time the sale of their current home to avoid double mortgage payments.
Although these are usually connected to condos and townhouses, Homeowners Associations (“HOAs”) can apply to single-family homes too. Find out if there is an HOA and familiarize yourself with the regulations. Many associations enforce specific rules regarding moving times, elevator reservations, and fees—failure to plan for these results in unexpected expenses or logistical headaches. Review HOA rules thoroughly and account for any additional costs in your budget.
Buyers sometimes underestimate the importance of preparing all required funds for closing. Lenders may have specific guidelines for delivering or verifying the money, such as through wire transfers or certified checks. Ensure that you have accounted for all costs, including closing fees, down payments, and other expenses, and confirm these details with your lender beforehand.
Remember that it is common for a buyer’s credit score to dip temporarily after taking on a new mortgage, as it affects the credit utilization ratio. While this dip is expected, avoid applying for additional loans or credit immediately after closing, such as for a car or home improvements. You may end up paying a higher interest rate than if you had waited three to four months for your credit to stabilize.
From The Seller’s Perspective
Sellers are legally and ethically obligated to disclose known property defects. Hiding them leads to disputes and financial liabilities. Address any significant issues in advance or be upfront about them during negotiations. Transparency helps prevent delays and builds trust with buyers, leading to smoother transactions.
Neglecting financial responsibilities like mortgage payments, property taxes, or HOA assessments during the sales process can create problems at closing. Liens, unpaid dues, or delinquent taxes must be resolved before transferring the property, potentially delaying the sale. Stay current on all payments to avoid unnecessary stress or additional fees.
Buyers often request repairs or credits after the home inspection. To keep the deal moving, sellers should act reasonably. While offering credit might seem convenient, buyers sometimes worry that the repair costs may be higher. The option to handle repairs directly reassures buyers and maintains momentum toward closing. Sellers should ask themselves whether they are willing to compromise or risk putting the property back on the market, which can delay a sale and incur additional costs.
If the property is part of an HOA, sellers should confirm whether any special assessments are upcoming. Failing to disclose or account for these assessments can lead to disputes or financial complications at the closing table. Proactively addressing this information helps avoid misunderstandings and ensures a smoother transaction.
We’ll Guide You Through Each Obstacle
Avoiding mistakes in a residential real estate deal requires careful preparation and communication. Whether buying or selling, proactive steps can save time, money, and stress. Contact us today to schedule a free consultation. We represent clients throughout Chicagoland and Northwest Indiana and are here to guide you through every step of your transaction.
Auricchio Law Offices
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