There is already a lot of stress associated with selling your home and buying a new one. However, if you decide to close on both properties in the same day, you’ve just added another level of stress to the process.
That’s according to Frank Dowd, a licensed title agent and the founder of Associates Land Transfer Company (ALT Title).
“In certain situations, you can't avoid it. But there’s a lot of unnecessary stress there,” he said.
With a simultaneous closing, you set both transactions as close together as possible, typically on the same day, often selling first and buying second. If something goes wrong in your first transaction, you could be in trouble – you could walk away without a big check and possibly won’t be able to close on the house you’re buying.
In addition, there is always the possibility of something being wrong in the paperwork needed to close, causing a delay in the transaction. Document problems can be as simple as a name misspelled or a transposed number in an address, or as serious as your loan not being cleared to close because the lender hasn’t received evidence of homeowner’s insurance. All of these hiccups can cause delays of hours or even days – everything has to be in order before closing can be completed.
“There's very little room for error (with simultaneous closings). You can end up waiting for lender documents, problems resulting from a final walk through issue, or funding delays,” Dowd said.
If you don’t have a choice and have to have a simultaneous closing, there are some precautionary measures you can take to ensure both transactions go through smoothly that day.
First and foremost, Dowd recommends picking the date of your simultaneous closings carefully.
“Avoid settlement the last couple days of the month,” he said, explaining that the end of the month is usually a sort of "traffic jam" that's typical at many mortgage, title, and closing companies. This means there’s more potential for unforeseen delays that can prolong or even postpone your closing.
“You want to avoid the last week of the month because that's when most of the glitches happen,” Dowd reiterated.
Make sure that if you need to bring money to closing, it’s in the form of a certified or cashier’s check payable to the settlement company. You could also arrange a wire or bank transfer of funds so it gets to the closing agent a day early. This will give you enough time to make sure they received the correct amount of money before the day of closing.
Overall, you’ll want to plan the day perfectly, which Dowd said is the best way to avoid anything getting in the way of both transactions going through that day. That involves several key things:
- Reviewing every piece of paperwork as far in advance as possible to catch mistakes
- Keeping in touch with your closing agent and mortgage broker to ensure paperwork is done and ready in time
- Remaining in contact with your loan officer to confirm they have everything they need from you
- Arriving on time to closing, along with everyone else involved in the transaction
Buying and selling a home is an exciting but stressful time – but it doesn’t have to be quite so stressful.