By Mike Baird
Whenever Greg and I host one of our Property Bank seminars, I always tell new investors that they should never fall in love with a property until they’ve closed. And they should never start spending their profits on a finished flip house until they’ve left the closing table, either. Whether you’re buying or selling, closing can be really stressful, and a sure deal can turn into a nightmare that’s just not worth it in a matter of minutes. Fortunately, while you can’t plan for every contingency and sometimes things just aren’t meant to be, there are a few things you can do to make any closing easier and more likely to succeed.
Double-Check Everyone’s Schedule
A few days before your scheduled closing date, get in touch with everyone involved in the closing to make sure that they have it in their calendars and that they haven’t double-booked themselves. If your closing attorney is booked for your closing on a day when she has to be in court, she’s not going to make it to your closing. Things can get really drawn out as you try to figure out when you can reschedule, and that gives the buyer or seller a chance to back out.
Make Sure You Have the Money
If you’re buying a flip house, you’ll want to be certain that you can write a check for the full amount of the accepted offer price and that you’re ready to cover closing costs, as well. The seller might cover these costs, but if they’re in financial distress and they’re just trying to avoid foreclosure, they’re probably not in a place to pay closing costs.
To avoid problems when you get to the closing table, determine who’s going to be covering which costs ahead of time. You may be able to negotiate a slightly lower price on the property in exchange for paying closing costs so that you’re essentially split those costs with the sellers. Either way, be prepared to factor closing costs into the price you pay for the property, and if those costs are too high, you’ll need to either agree on a lower price or find a different property.
If you’re selling a house, I almost always recommend offering to pay for closing costs upfront. When you let buyers know that they won’t have any additional costs at closing, they’ll be more likely to make you an offer at or above your asking price instead of trying to negotiate for a lower price.
Don’t Book Anything Else for Closing Day
Finally, if you have a full day of overseeing rehabs, looking for new leads, and other obligations, you’re going to be looking at your watch every five minutes during closing. You’ll feel rushed, and that’ll add stress to the situation, which will make your buyers or sellers more tense and more likely to walk away or introduce a new complication to the deal.
I’ve seen real estate investors try to squeeze closings in between work, picking their kids up from school, and even catching a flight for a long-awaited vacation. Don’t do this stuff to yourself. In fact, take the day off when you have a closing scheduled. Let everything else take care of itself while you take care of buying or selling your latest flip property.
I can’t say that these tips will keep you from experiencing some of the insanity I’ve run into when closing on a flip house, but I can tell you that they’ll generally make things easier and smoother for everyone. Follow them for your next closing and see how well it can go.