Closing Time
One of the advantages of selling to a real estate investor is the fact that closing on your home can take place far more quickly than with a traditional sale, meaning you’ll have cash in your pocket in far less time. Still, you need to know what you’re getting into before the deal is done.
Why Closings Happen Quickly
Rapid closing times are a major bonus when it comes to selling to an investor. There are several reasons why closings happen quickly when it comes to these transactions:
- The investor is just about certain to come with cash in hand or financing already sewn up. This speeds up the deal as opposed to a traditional sale, where buyers most often have to arrange to finance before it can close.
- Negotiations are more streamlined and the investor typically does not ask for concessions or contingencies, both of which can gum up the works.
- You can sell your home as-is, so there are far fewer worries about appraised value or inspections.
Ironically, some of the challenges that might have led you to work with a real estate investor — home condition, for example — are also the factors that lead to a more rapid closure of the deal. Talk about lemonade from lemons.
Prevent a Stalled Closing
While the closing period should be fairly rapid when selling to an investor, issues can crop up all the same. Here are some of the major reasons that closing stalls — and how to avoid them:
- Listing unrealistic dates in the contract. Make sure you know whatever milestones must be hit will indeed be hit on the dates specified. Otherwise, you could get into trouble.
- Title issues. If your title isn’t clear, your deal isn’t going to go through. The way to handle this is to contact your real estate attorney — and if you don’t have one, you should.
- Differences in closing amounts. This has to do with the HUD-1 Settlement Statement, a closing statement that isn’t always known for its accuracy. Check your figures, then double-check them.
You aren’t as likely to run into issues at closing as you might be with a more traditional sale, but you still need to remain vigilant so that you can have cash in hand sooner rather than later.
Avoid Junk Fees
One of the advantages of selling to an investor is fewer closing costs — you’ll avoid junk fees simply by going this route. However, when the investor pays these closing costs, it can gobble up a chunk of your home equity. Junk fees include:
- Application fee
- Underwriting fee
- Inspection fee
- Credit report fee
- Administrative fee
The way to avoid these is to work closely with your real estate attorney, who will know which fees are legitimate and which are simply padding.
Get it in Writing
Handshake deals have no place in real estate. Document everything you and the investor have discussed and make sure that you and your attorney have those items in the contract. Keep in mind that spoken agreements have no legal standing.
In other words: write it down. When in doubt, write it down and make sure it makes sense. That’s the only way an agreement is enforceable.
