The New Regulations as of October 3rd 2015 will become a game changer in the Real Estate industry.
The regulation was put into effect with the intension to protect the buyer and seller but could potentially cause havoc in the purchase process. It will be important that you are working with a Realtor, Lender and Title Company who is competent and keeps up with the ever changing regulations and contracts that protect YOU the consumer. While the process is worked through you can expect properties that are utilizing financing to take anywhere from 5 to 20 days longer. In general at present time it will push the financing and closing process from the usual 30 days to 45-60 days.
There are some key changes in terminology and the disclosure requirements. In the past many items and disclosures were pushed to the last minute causing Title Companies to make updates resulting in buyers or sellers seeing they’re Closing Disclosure (formerly called the HUD) last minute, a day to just few hours before closing due to last minute changes or delays. Those days are gone.
The most important change that will have a trickle down effect is… The Closing Disclosure must now be given to the buyer and seller a minimum of 3 business days prior to closing so they have ample time to read over the figures and ask questions if needed. This document has to be in line with the initial loan disclosure (that was provided after the loan application) some changes might cause the lender to have to re-disclose and trigger another 3 day period.
If that document is late getting to the buyer or seller the closing date must be rescheduled to reflect 3 days. Any time the Closing Disclosure is altered or updated even minimally puts the document back into the 3 day waiting cycle.
Things the buyer/seller can do once an offer is in place and they are past the option period to help ensure a timely closing:
Buyers should begin the approval process of a mortgage when they begin to look for homes. Having all the necessary documents to the lender will expedite the mortgage process and the only way to compete with cash buyers.
Buyers should begin to shop and make decisions on hazard insurance and home warranty programs early on in the process. The lender will need this information much sooner than before, within the first 2 weeks when possible.
Buyer walk-throughs will change. If there are repairs a buyer may want to do an inspection of the repairs soon after they are completed and then a final walk-through the day of closing or after move out. Buyers or Sellers should not risk a repair inspection close to the closing date. It could delay closing. Finding timely contractors in a busy market is important, this is where you realtor will be able to assist.
Sellers, begin any repairs that you have agreed to make immediately and make sure they are done to contract specifications. The repairs you have made will be inspected. Failure to make agreed repairs per contract specifications is a big cause of delay. It is recommended you have them completed 15 days prior to closing.
Many of the items listed above were not always considered priorities but will need to be treated as so to ensure a smooth and timely closing. Buying or selling a home is always work, but with the right people in your corner and being fully prepared and informed it can be less stressful for you and your family.
When Choosing a Realtor:
Ensure you have a knowledgeable and professional Realtor working for you. Although finding the right home in a neighborhood for a family is one of the first steps it is far from the last. Working with a responsible Realtor will help you understand the industry changes and facilitate the sales process so things are moving toward a successful closing, holding all parties accountable for timelines and communication.
Your Realtor is a good source on financing and title companies. You may know 1 or 2 but a Realtor may have experience with many and know if they are efficient and reliable doing their job specifically with the new changes.
You should ask the Realtor if they are active in the industry, keep up on education themselves and current on all the changing rules and regulations. The residential sales contracts usually has changes made to them about every 2 years. Your Realtor should know how to utilize the changes to serve you the client best!
Angie Jones
Horizon Realty Austin
512-619-7181