How to Handle a Closing Day Surprise
You’ve made it this far. You’ve negotiated the price, had the home inspected, gotten your loan approved, and the house sale is heading for the corner pocket. Nothing else can go wrong, right?
I had to wait a week for the steam to stop coming out of my ears before I could tell you about our closing-day surprise. The hour before my husband, DC, and I were to meet with an attorney who was handling the closing transaction of our new house, we had a walk through.
Walk throughs have always struck me as unnecessary formalities. But since that closing ceremony and the wet-ink signing were all that stood between me and the keys, I was going with the program.
Turned out, this was not your typical walk though. DC noticed the stain in the upstairs bedroom first, a rust-colored splotch about the size of a large dog on the cream-colored wall-to-wall carpet. We hadn’t seen it before because the room had been full of exercise equipment, which covered the stain, and likely caused it. Inspectors, we later learned, aren’t required to lift heavy furniture, so the inspection report made no mention.
Now as we looked through the empty house, the stain stood out like a fly in the cream.
My heart sank. Replacing the carpet upstairs was not in our plan, but keeping this carpet was out of the question. I looked to my agent, Wendy, for help.
“We never saw this,” I said.
“It’s an as-is sale,” the seller’s broker reminded us.
“As-is” means buyers can inspect the property and end the sale if they find a problem they don’t like or don’t like the sellers’ response to fixing it -- as long as this is done inside the inspection period. After that, the sellers only have to keep the property as it was when inspected. When a problem the buyer and inspector missed gets revealed, the situation can become complicated.
The next hour was a flurry of frantic phone calls, side-bar conversations, pitched emotions, dug in heels, narrowed eyes and crossed arms. As I grew more resolute, I was grateful for two players: My agent and my husband.
If you ever think about trying to buy or sell a house yourself, here’s reason No. 107 not to. Good agents save deals that you might blow up in an overwrought fit of frustration.
In this case, both our agent and the selling agent were pros, who stayed cool and focused on finding a fair resolution. Meanwhile, I had the good sense to hand the discussions over to and my level-headed, diplomatic, lawyer husband, who often saves me from my impulsive self. But I didn’t shirk my authority without first making my position clear:
“Remember what you told me when we started looking at houses?” I asked DC.
He gave me a questioning look.
“You said, you have to be ready to walk away. Well, I’m ready.”
He pulls in a river of air through his nostrils as if bracing himself for a swim to Alcatraz.
Though most closing transactions are smooth, “about one in four hits some turbulence,” said attorney Harold Downing, of Winter Park, Fla., who handled our closing, and lucky for him, stayed out of the fray.
Attorneys who preside over closings are neutral parties who don’t represent buyers or sellers but rather work to make sure the transaction proceeds in accordance with the contract. They perform the same role as title agents, and both can do the job equally well, said Downing.
We were relieved an attorney was handling our closing in case the situation required the drafting of legal documents, which title agents cannot do.
Fortunately, that wasn’t necessary. The agents worked out a compromise offline that settled the carpet matter to everyone’s satisfaction. What saved the sale was that all the parties wanted to close and were willing to give a little to make it happen. Thus, apart from the occasional use of defib paddles, the signing ceremony went off as planned.
And we got a house.
Regardless of whether a title agent or a lawyer oversees the closing -- and both charge about the same, between $400 and $1200 -- what matters most is experience, real estate experts agree. A lot can go wrong at the finish line.
All of which raised the question I always have when I look at the title fee on the closing statement: What do these people do for that money? So I found out:
They look for trouble. “Our job is to anticipate problems, and resolve them before they ever get to the closing table,” said Downing. “We review the title and see what might hold us up. Hold ups can include problems with trusts, easements and estates.”
They search the property records. The title agent will look at prior deeds, court records, the survey, property and name indexes, and other documents to be sure no liens or other problems will interfere with transfer of ownership.
They do identity checks. When the title search turns up a person with the same name as the seller, and that person has judgments against him, “we dig deeper and get the identity resolved,” he said.
They oversee the money transfer. Property sales are typically large-dollar transactions. Closing agents make sure the money gets transferred at the right time to and from the correct institutions, according to the rules.
They prepare the documents. These agents create the many, many closing documents so they are accurate and ready for signatures.
They are neutral. If a disagreement arises between buyer and seller, they don’t take sides.
CAPTION: Keeping it together – Because house deals can fall apart right up to the last minute, it’s important to work with seasoned real estate and title experts. Photo courtesy of dreamstime.com.