Closing on a property can be both exciting and stressful. You hope that everything will go smoothly, so that you can start enjoying your new home, or get to work on renovating your new purchase to attract tenants. In order to make that happen, you need to be sure to keep everything in check. Of course there are all of the closing costs to consider, which may include fees you haven’t thought about, but you also need to ensure inspections were properly taken care of, and that you understand all the loan details. No one likes surprise costs.
Below, Forbes Real Estate Council members have shared their best tips to help keep you on track through closing on a new property. Here’s what they have to say:
Members discuss a few things to watch for when closing on a property.
Photos courtesy of the individual members.
1. Check Everything At The Preclosing Inspection
My checklist has 27 categories that need to be checked. One category alone is to make sure all the windows open and close. Last I checked, the lists online don’t include checking that all the locks and keys work. You want to do the walkthrough with someone who has done them before. If you don’t have an agent with a fiduciary responsibility to you there, hire one, or hire a local engineer. – Deborah Rabbino Bhatt, Vesta New York
2. Be Prepared To Pass Inspections In All Seasons
When looking for a home, a lot of buyers forget there are multiple weather seasons. This can become an expensive problem later on. A good example would be shopping in spring or summer when home insulation is not an issue. If you buy the home and it doesn’t hold heat well, it will cause massive electric and heating bills, and may also lead to a purchase of costly new windows that you weren’t prepared for. – Ralph Dibugnara, Home Qualified
3. Be Prepared And Know How Much Cash You Need At Closing
Get a copy of the preliminary closing statement to see how much cash you need to bring to the closing table. Things like closing costs, lender fees, prepaid interest or prorated real estate taxes could mean you need to come out of pocket more than expected. This simple step can avoid last minute surprises! – Gary Beasley, Roofstock
4. Recognize That Timing Can Change
It’s important to stay flexible around the close date as last-minute issues with the lender or title recording can delay the close date. I wouldn’t recommend buyers schedule movers or give the notice to vacate a rental without keeping in mind that there may be some changes to the timeline. – Beatrice de Jong, Open Listings (YC W15)
5. Budget For Costs After Closing
Some would consider this common sense, but we see the line blurred between cash out of pocket and money leveraged from the bank. After closing, buyers need to account for furnishings, renovations, alterations and upgrades — real dollars that come out of a buyer’s pocket, as opposed to the bank. – Michael Rubin, Compass
6. Have Insurance
When preparing to close on a property on the purchasing side, it is critical to make sure that you have the proper insurance coverage in place. Make sure you are protecting yourself by carrying the appropriate policy type and coverage for your exit strategies, such as builder’s risk, flood and general liability. Improper or no coverage could be devastating in the event of an incident. – Melissa Johnson, Dannybuyshouses.com
7. Don’t Forego Due Diligence In Favor Of Time
Don’t allow folks on the other side of the deal to stress you out. Sellers and sellers’ agents often create unnecessary urgency through tight obligatory contractual dates in order to press past buyer concerns regarding inspection issues, for example. If you’re feeling undue pressure to meet contract dates or forego due diligence, tell the other side that you require time to sort it out, or walk. – Garratt Hasenstab, The Mountain Life Companies
8. Schedule Early For Investment Properties Requiring Capital Improvements
With regard to investment properties requiring capital improvements, get quotes prior to close and schedule your contractors and specialists while preparing to close. In a hot market, many of these individuals are booked out a few weeks in advance. If you don’t schedule early, you may be sitting on an unreleasable/unmarketable asset while paying the cost to carry for longer than expected. – Catherine Kuo, Elite Homes | Christie’s International Real Estate
9. Don’t Change Your Circumstances
One mistake buyers make after their mortgage has been approved is to make changes to their credit or employment situation. Charging large expenditures that alter the debt-to-income ratio may disqualify them or raise their interest rate. The same goes for changing jobs or resigning to launch a freelance career. Buyers need to assume a holding pattern until the deal closes. – Joe Houghton, RE/MAX Results/The Minnesota Property Group Team
10. Demand Accuracy And Thoroughly Check Statements
Do not rely on anyone else to ensure the settlement statement is accurate. Even simple real estate transactions have several layers, and humans make mistakes. Buyers and sellers are the most important part of a transaction. Title companies, brokers and lenders would not exist without them. Demand to see the settlement statement at least one day before closing, and review it thoroughly for accuracy. – Z Otto Bonahoom, Bohouse Investment Group
11. Double Check Your Terms
Despite the reality that 99%-plus of the horror stories in real estate are a result of a challenge related to the financing portion of the purchase, few real estate owners focus their due diligence efforts accordingly. Prior to closing, be sure that you have a thorough understanding of all of the loan terms, what their implications are, and what courses of action you can take if things go sideways. – Hunter Thompson, Cash Flow Connections
12. Have A Detailed Schedule In Place For Investment Properties
When closing on investment property, you should have your game plan set for the entire project. This means not only having your contractor and resale/refinance options sorted out, but you should also have a week by week rehab schedule set and be ready to commence work immediately. Time is money. – Mark Bloom, NetWorth Realty