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DD Web • Jul 01, 2020

Your Contract-to-Closing Checklist for Real Estate Buyers

As a realtor, you perform a multitude of tasks to ensure that the home purchase process goes smoothly for your real estate buyers. You manage nearly every aspect of the transaction, not only your own duties and deadlines but also theirs. Your clients look to you for guidance, insight and ultimately — a big, reassuring checkmark next to each completed task as they get one step closer to closing on their home.

You’re only human, and even the most expert real estate professionals struggle to master the volume of tasks they face. Additionally, the process between signing a contract and closing on a new home can be confusing for new real estate buyers. So, how can you help each client manage the transaction process without bankrupting your time?

In The Checklist Manifesto, award-winning author Atul Gawande revealed the power of creating checklists to help professionals manage the complexities of today’s world and it holds a lot of relevance for real estate. He notes that “Success frequently requires multiple people, often multiple teams, and specialized expertise. Unanticipated difficulties are frequent. Timing and coordination can become serious concerns.”

Sound familiar?

No matter what end of the spectrum you’re at, the business of real estate is a checklist-driven activity. A real estate buyer checklist will help buyers comply with contractual obligations and ensure nothing falls through the cracks. And while unforeseen factors can affect the ease and timing of a real estate transaction, its purpose is to help buyers keep track of critical dates and time periods throughout the transaction.

Here is our 10-step checklist to guide homebuyers through the initial stages of a purchase all the way to closing day.

1. Determine your readiness: Understanding the costs of home buying and home ownership are vital steps in determining whether you’re ready to ‘take the plunge!’ Factors that determine financial readiness include your current income, savings, fixed expenses and debts.

2. Become optimal mortgage candidates: With lender requirements stricter than ever, you’ll need to make sure your credit and finances are in excellent condition. Try to pay off or pay down outstanding balances on credit cards, car loans etc. This will help improve your income-to-debt ratio and improve your credit score.

3. Get a pre-approval letter: A loan officer will review your finances and credit report and determines you qualify for a specific loan amount for one or more mortgage programs. The lender will then offer you a pre-approval letter, which will be a testament to your buying power when you’re ready to make an offer on a home.

4. Determine your budget: Your pre-approval letter will tell you how much the bank is willing to lend you, but how much you can really afford is a personal decision. The bank will take your fixed expenses into consideration when determining your pre-approval amount, but you will need to determine what you’re comfortable spending each month.

5. Find a real estate agent: With access to multiple listing services and insight into the market, a real estate can help you find the best property matches as well as facilitate the negotiating and closing process. Using an agent will make the entire process much easier, especially for first time real estate buyers.

6. Select a property: Narrow available properties by determining what you really want and make a list of pros/cons. Your agent will help you arrange home viewings for your properties of choice. Once you’ve selected the right home, it’s time to make an offer and close the transaction.

7. Make an offer: The current market condition, time of year, home repairs and the length of time the home has been on the market can all affect your offer — not to mention your own budget. The price is not the only factor within an offer, either; you can also negotiate closing costs, necessary repairs, etc.

8. Inspect the home: Once your offer is accepted, it’s customary to schedule a buyer’s home inspection. This is when you have the opportunity to get a professional opinion on the condition of the home and determine any red flags (damage, pests, structural issues, etc).

9. Sign a purchase agreement: The sales contract, or purchase agreement, will outline the specific directions of the transaction. The contract will outline the details of the sale, negotiated repairs to be made, certain disclosures on the property, etc. This, along with a payment of earnest money, will be held by your realtor or title/escrow company.

10. Close the transaction: Understand that the closing process can require several weeks (or longer) and many steps. During the escrow period, you will work with your lender to secure your mortgage. The process will involve gathering a wealth of financial paperwork and arranging a lender’s appraisal of the property. During the closing, your lender may require you to purchase a homeowners insurance policy, and you will have the option to purchase an owner’s policy of title insurance. When the requirements of your purchase agreement have been fulfilled and your mortgage has been approved, you will be given a final walk-through of the property. On the closing date, you will sign your mortgage documents and should receive the keys to your new home the next day!

By providing real estate buyers with this checklist, you can better help them understand each step in the process and what to expect, from purchase to closing. It’s an easy way to ensure that you provide your clients with excellent service from the get-go (and secure potential referrals down the road).
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