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Closing really means Final, Final!!! Things a realtor can do at a closing that REALLY matter

Recently, I conducted a real estate closing in Massachusetts that came together in less than two(2) weeks from Offer to Closing. After the closing was completed, but before I had disbursed funds to the Seller, my Buyer discovered that a closing cost credit that was clearly set for in the Purchase Agreement did not make it to the HUD-1 Settlement Statement for the transaction.

This was, of course, after the Lender had “thoroughly reviewed” the HUD-1 and give its approval. Fortunately for my Buyer, our office has a ZERO TOLERANCE policy of not remitting to the Seller until a final review of the Purchase Agreement is made and the items on the HUD-1 Settlement Statement compared to the terms of the Purchase Agreement. To be perfectly candid with my readers, this ZERO TOLERANCE policy was born from a colossal mistake one of my paralegals made in the past which led to our firm absorbing a $5,300 loss in a residential sales transaction.

In any event, I am sure that not all closing agents practice the paranoia we have made as POLICY at Topkins & Bevans. That being the case, I have the following suggestions for you realtors who attend closings on behalf of the Seller or the Buyer:

     1.  Bring the fully signed copy of the Purchase Agreement with you to the Closing. It is a sad commentary, but you may be the only entity which actually has that kind of document in your possession. I find it often the case that I will negotiate the Purchase Agreement, and add riders, but, in the end, I never get a signed copy of the final Agreement.

     2.  Compare the Signed Copy of the Purchase Agreement with the HUD-1 Settlement Statement. The Buyer and Seller are busily working with the closing agent on getting all the documents signed. The Seller wants his money; the Buyer wants to get out of the Closing as fast as possible to pick up the kids at Mom’s, or greet the mover, or do a thousand other last minute things. You are there with actually very little left to do. You have done most of your work already. But, you can do all parties a big favor by just going through things “one more time”.

     3. Bring any discrepancies you discover discreetly to the attention of the closing agent. Certainly, your goal here is NOT trying to “show-up” the closing agent. You just want things to be CORRECT. Believe me, he or she will appreciate your efforts. So should the affected party for whom you may have saved thousands of dollars. If the closing is a chance for you to continue marketing, this diligent review of the Purchase Agreement will only underscore your thorough approach to all situations and enhance your standing with everyone in the Closing room.

The next time you hear a colleague complain about the requirement of going to a closing and being bored out of his or her mind, suggest the review set forth herein. I am almost sure that such advice, after being adhered to a few times, will engender a “thank you” from the person you suggested it to. Money errors at the Closing are hard to fix, and often result in expense of time and money, even if they can be rectified. You can be a vehicle for preventing these errors, and I urge you to be PRO-ACTIVE in this endeavor.

Marketing 101–The Notebook

At residential real estate closings which I conduct, my main goal is always to gain the trust of the people buying their home or condominium unit. I generally do this by spending as much time as the purchaser wishes going over the HUD-1 Settlement Statement and the accompanying closing documents, like the mortgage promissory note and the mortgage, itself. There is usually a point where the purchasers start to believe that I am a decent guy who is not trying to do anything but help them buy the home they have searched for, and wanted, for a long, long time. They are prepared to listen to me, as the closing attorney, for advice for the future.  

You, as the real estate professional, are almost always in attendance at the closing, if you are thinking correctly, because not only is this a time to receive your well-earned commission, it is also a time to participate with your customer in a positive experience with the thought that you will have earned the chance to work for the purchaser, and perhaps friends and relatives of the purchaser, in future real estate experiences. Together, you and I (if I am fortunate enough to be working with you on this transaction) can make suggestions to the buyer which will put real estate professionals, but more importantly, you, in an extremely favorable position. 

Some realtors make gifts to the buyers of a bottle of wine, or a door knocker, or a framed picture of the home they have purchased. May I respectfully suggest a different approach? May I suggest that you deliver a large three (3) ring binder, with your name and pertinent contact information included therein, and perhaps the property address placed on the outside thereof?  

This gift, you inform the purchaser, is for them to create a working history of their home. I provide the first document, an 8 and one-half by 11 reduction of their fully signed HUD-1 Settlement Statement. I suggest that they take the original HUD-1 and place it in their safe deposit box. I then advise them to copy the Owner’s Policy of Title Insurance which I will be sending them and place that document in the binder as well. 

You can then suggest that the purchasers make a copy of every invoice related to their new home and insert the copy in the binder. This includes purchases of new appliances or fixtures, and also expenses of plumbers, electricians and other artisans who have done work on the new home. A few of my creative realtors have included tabs in the binder to provide information on local contractors whom the realtor has found reliable. In effect, they have developed their own “Angie’s List” for their customer, no doubt endearing themselves to the contractors who are getting new customers because you have included them in the binder. There may even be the possibility of having these contractors furnish money-saving “coupons” which you can include in the binder. 

If the purchasers take seriously the suggestions we have made, and use the loose leaf binder you have presented, the following positive results will almost surely follow: 

  •  
    1. Future Marketing of the Home

 At some point, your purchaser will become a seller. The completed loose-leaf binder becomes a powerful marketing tool for you when you list, and show, the home. You do not have to tell the prospective buyer that the washer and dryer are new. You have the actual invoice for the purchase. You can demonstrate when the floors were sanded, and by whom. You can also deliver any existing warranties for work on the home or fixtures and appliances. Your presentation is “buttoned-up” and it will be impressive.

  •      2.  Tax Implications.
  • In the current tax picture, it is not important to have good basis information for a residential home that is being sold. Given the uncertain economic climate we are in at present, this could change. The information in the binder permits the purchasers to collective complete basis information which can be given to their tax accountant or used by themselves (if they prepare their own taxes) when they sell their home. 

    3.  Retrieval of Important Information.

    The invoices and statements in the binder contain information which can be useful in the future. Perhaps, owners want to redo their floors after three or four years. The archived invoice will provide information as to how to contact the contractor who did the work. If any vital information is missing on the invoice, the owner can include same before inserting it into the binder. 

    4. Emotional Benefit

    As all of you know, a home is more than brick and mortar. It becomes a personal statement for the owners as to the owner’s creativity and responsibility. Having a complete loose-leaf binder demonstrates to the owners that they have really made the home better. There is a feeling of achievement about their home which becomes a source of pride. You can convey that positive spin when you market the home on the owners’ behalf. 

    As I have indicated, I have been suggesting, and using, this technique for many of the more than 40 years I have been practicing real estate law. I am convinced that it works. On the other hand, even good ideas can be improved. I would welcome comments from you as to how the loose-leaf binder approach could be improved or amplified Email me at etopkins@topbev.com if you wish to begin a personal dialogue. Please visit my blog at http://realtorsresourceblog.com/