A real estate closing is an important occasion for any homebuyer, particularly if it's their first time making such an important transaction. There's a lot to coordinate, and you can help your clients get organized, remind them of some tasks they need to do, and make sure that the transaction goes smoothly.
What Buyers Need to Do: Get a Home Inspection Report
Buying a home is a huge investment and getting a home inspection report will give your clients the reassurance of knowing that the condition of the house they want to buy is sound. The report will also identify what, if any, repairs need to be made, so that your clients won't have any nasty surprises after they move in. If your clients are moving into a newly built house, they may wonder if an inspection is really necessary. It’s still a good idea to hire a home inspector who can spot any problems with the new construction.
When your clients are in the process of buying their house, they will be required to purchase title insurance. If they are first-time homebuyers, they may not be familiar with title insurance, so you should explain to them that title insurance will protect them in the event that their seller doesn't have a clear title to the property. For instance, if the seller inherited the house from an uncle, the uncle's stepbrother may decide to step forward, claiming that he should have been the heir. The courts then have to decide if the seller actually had the right to sell the house to your clients. Title insurance will also protect your clients if it turns out that liens have been placed against the property—for instance, by the IRS, because the uncle hadn't paid his taxes in 20 years.
Your clients should be aware that although the chances of calling on their title insurance are slim, it's possible they could lose their home without title insurance. Your clients may ask about a title search: the title company or their attorney will perform a search of the public records regarding the house, but the insurance will protect your client against problems that aren't discovered during the search, or if the uncle's stepbrother does in fact turn out to be the legal owner of the house they just bought.
The lender may require a "termite letter" for the closing—a letter from a licensed extermination company to the effect that there is no termite infestation in the house. Normally the seller supplies this letter if it's required, but it's a good idea to check the contract to make sure that's the case. The state of California requires that the seller should give the buyer a Natural Hazards Disclosure Statement if the house being purchased is in an area that has been designated by various government agencies to be at risk from flooding, fire, wildfire or earthquakes. While it's the seller's responsibility to supply this document, it's appropriate to ask your clients if such a report has been received when you're reminding them that they need to purchase homeowners' insurance, since the report may affect the coverage that they decide to purchase.
The lender will require that your clients have homeowners' insurance in place at the time of the closing. This policy protects the lender as well as the homebuyer against the loss or damage of the house due to fire, etc. If the house being purchased is in a flood zone, the lender may require that the homeowner purchase separate flood insurance coverage if it is not already included in their policy.
Walkthrough Before Closing
One important final task that shouldn't be rushed is the walkthrough before closing. The final walkthrough is when your clients have the chance to verify that the house is in essentially the same condition as it was when their offer was accepted, and that any agreed-upon repairs have been made. While some buyers schedule the walkthrough on the morning of the closing day, you may want to suggest scheduling it on the day before and allowing at least 30 minutes to an hour for a thorough inspection. If at all possible, accompany your clients on the walkthrough—not only is it a supportive gesture, but if any problems do arise, you can help coordinate getting them resolved. During the walkthrough advise your clients to turn all lights and appliances on and off to make sure that they're working. You can get an electrical tester for a few dollars that can be used to make sure that all the outlets are working. And remind your clients to bring a copy of the home inspector's report to make sure that any outstanding repairs have been made.
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