Moving fast: How to Streamline a Home Closing
Demand is high, inventory is low, prices have soared, and rates are at rock-bottom. We’re in a seller’s market through and through – and have been for some time. What does this mean for buyers? In Boston and surrounding areas, buyers are adjusting their expectations. With less leverage in the negotiation process due to steep competition, buyers have had to sit back and hope for the best as sellers prioritize offers that promise fast closings and the highest purchase price. Like buyers, Realtors have felt the squeeze as they’ve managed their clients, guiding them through the tough process of competing against dozens of other offers.
Leading clients through today’s market requires more than just the best home purchase price, it takes patience, preparation and forward thinking. Showcasing a client who is nimble and ready to move quickly can be a key determining factor in a seller’s decision to move forward with an offer. At the same time, managing timeline expectations with all parties is also critical, as delays and bumps in the road are a natural part of the mortgage process.
Managing buyer expectations
According to a recent study from Bankrate, 64 percent of millennial homebuyers have some regrets about their recent home purchase, with many unhappy with the final costs. Managing a client’s expectations in today’s market is a critical aspect of the home search. With today’s home prices, buyers may have to walk away from turn-key and consider a fixer upper– but there can be great benefits to investing in upgrades for a starter home while the market is hot.
Beyond the actual property, typical mortgage processes are taking far longer than normal. High volume and pandemic restrictions are delaying final appraisals and inspections. At the same time, low interest rates have kept mortgage and refinancing volume high, making it more difficult for lenders to meet quick turnaround deadlines. Clients should be aware that taking extra steps to ensure they’re ready to move fast when closing can set them apart from the competition.
Getting buyers’ ducks in a row
While closing timelines can’t always be flexible, there are many things realtors can do to help clients speed up the overall process of purchasing a home.
Encourage buyers to take the time to meet with a mortgage lender before looking at properties. Together, buyers and lenders can establish a well-informed and flexible timeline, discuss total purchase costs and begin compiling necessary documents, which will include tax returns, pay stubs, proof of employment and more.
Earlier this year, TD Bank conducted a survey of 1,000 homebuyers planning to purchase their first home in 2021, and just 53% of respondents said they had determined a homebuying budget. Additionally, nearly one third (30%) cited that the best time to find a lender came after finding a home. In reality, meeting with a lender before starting the home search is a vital step for buyers to learn what they can afford and how they can best prepare to make an offer. Along these lines, realtors should also encourage buyers to be open and honest with their lenders, as any unexpected problems, like clearing up a credit report issue could, cause serious delays.
While many of those searching for a home in today’s market are not first-time buyers, today’s market is likely unparalleled to their previous buying experience. Take steps to help buyers avoid potential delays in the process. Put clients in touch with a lender you trust, instruct them to begin gathering information and paperwork, give them an overview of the process from offer to close so they know what they’re in for and understand the steps. Ensuring buyers are prepared and well-informed will help them compete in today’s red-hot market.