Welcome to the series of posts helping Introverts with buying a home, selling a home or investing in real estate. I tend to be an introvert more than an extrovert so I thought it would be appropriate to give some advice to others like me on how they can succeed in real estate without having to go outside their comfort zones.
You have negotiated the repairs with the buyers and come to terms to move forward with the sell of your home. Congratulations! By getting over the hurdle, you are getting closer to finalizing the sale of your home and moving on to the next chapter in your life. You should go out to celebrate with your family. You deserve it. It is not time to completely relax however, because you have several things you still need to do before the closing date. The buyer will be busy with their lender working on getting the property approved, which means the lender will require an appraisal of your house. The appraiser will determine the value of the property to make sure it matches, or close enough, to the sell price of the home(keep reading to find out what happens when the appraisal is not!). The lender will also be sending the application packet to its underwriter for review and most likely the buyer is being asked to send some additional documents to prove or clarify something on their application. It would be nice to say that once you reach this stage that everything goes smoothly until the closing date. It usually does not. It can be very stressful when a road bump is encountered during this stage of the process because there is nothing as the seller you can do about it. It can be very frustrating to leave your future to other people.
The best way a seller can get through this time is to keep themselves busy. Fortunately, there are some things sellers can do, even introverted ones, to keep themselves busy during the finance approval stage of the process. Here are three!
1. Get the repairs done – One required activity that a seller has to undertake while waiting for the buyer to get approval for financing is completing the repairs agreed upon by the parties. Buyers will want to see some sort of receipt from you a week to ten days before the closing date. You will need to budget the time for the repair work to get them these receipts. As a reminder, all repairs should be done by a qualified technician with experience in doing the specific repairs. In other words, you or a family member can longer do the repairs. If you happen to negotiate that you will do the repairs instead of a qualified technician, then you need to provide pictures of the work completed to the buyer. It should be noted that repairs should be done at a high enough quality so that it lasts for years. Most buyers will come back to sellers after closing if repairs suddenly start to fall apart after they move into the property. It is best to think of the contract signed as being perpetual so buyers can come back at any time and claim the repairs were not done as agreed. Hopefully, the buyers will notice bad repair jobs during the final walk through of the property (check here for what buyers will be looking for during the final walk through of the property). However, sellers should set their expectations to hear back from the buyers after closing if they try to short the repairs.
2. Get ready to move – To fill the time while you wait for your buyers, you can begin to fill boxes for your move to your new place. If you don’t already have a place, finding one would be the first step. You should have made a plan with your agent to time the sell of your current home with the purchase of your next one. Even if you did, this sometimes can be difficult juggling act. If you can’t find your next home before closing on your current one, there are plenty of short term rental opportunities while hunting for your next home. Regardless, you will have to move out the home once it is sold. You need to be sure to keep boxes away from important systems in the house, like the electrical panel or hot water heater closet, in case the appraiser needs access these systems. Do not move out of the home unless you know 100% that the house is going to close. If you are not a 100% sure, get the buyers to give you a temporary lease back to your old house for a week. This cushion should give you peace of mind because even if the deal falls apart at the last second, you can continue to live at your old home while putting your house back on the market.
3. Get mentally prepared for changes in closing date and other contract terms – One of the most frustrating experiences in the process of selling your home is for something to go awry during the buyer’s financing approval. One of the most common occurrences is that the appraisal comes back lower than the sales price. All properties all have to meet a loan to value ratio when qualifying for a loan. If the loan to value ratio is 80/20, you would need to have a value of $100,000 to get a loan of $80,000. If for some reason the appraisal comes back at $96,000, either the home sales price would need to come down or the buyer would need to pony up more cash. It could also be they meet in the middle. Sometimes, sellers get lucky and the buyer has already put more money down than required for the loan to value ratio so the loan to value ratio does not come into play. Another common item to pop up at this stage of the selling process is that the closing date is delayed. Most of the time, this delay occurs because the lender could not get the approval process done in time. In recent times, it has seemed to many realtors that the close date was more of an approximation versus an iron clad date. It has gotten much better in recent times. Sellers should set their expectation that the closing date will have to be delayed and work with their employers accordingly.
In summary, introvert sellers should be filling their time with activities to get through the waiting period of the buyer getting financing approval. You should work on getting the repairs done as agreed upon with the buyer. Since your house is being sold, you will need to move and this is a great time to get ready for that move. Finally, be prepared for some roller coaster changes to the process as lenders will sometimes throw curve balls to put the closing date in doubt.