I do not attend closings. Every property I bought after the house in Pittsburgh has worked out well. That's seventeen profitable purchases in a row. Not attending closings sure makes a difference for me. I am up-front with my attorneys and lenders about not attending closings. They know that all the documents have to be ready a few days ahead of time for me to review.
Having reviewed many closing documents, I find them incredibly boring and chock-full of legalese. I do pay close attention to the closing statement, though. It enumerates the purchase price, how much money goes to the seller, and all the costs that I will incur as a purchaser. The closing statement also contains the prorations for real estate taxes, utilities, rent, and security deposits transferred by the seller.
I rework all the numbers to my satisfaction. I have caught many questionable items in my reviews that have required immediate answers that could have been easily overlooked in a traditional closing situation.
I’ve been disappointed to find that about half of the closing statements need to be revised. The errors relate to incorrect prorations or fees that I am being charged that I don’t believe are my responsibility. I also review the note to make sure the interest rate and other terms of the loan are what I expected.
When closing in this way, I sign whatever documents I can (sometimes a notary is necessary), and give my attorney a power-of-attorney letter to sign on my behalf. I've rarely had problems closing because of this. I’ve made sure that everything is in place, and the closing is just a matter of everyone signing the documents, and the various monies being transferred to the right place.
All of my closings have gone smoothly. As noted above, they are primarily a simple matter of the closer passing documents around for signatures.
In the event you are doing a double closing – purchasing a property and flipping it at a profit to a buyer – my advice is to use an attorney and a closing officer who are familiar with what has to be done at double closings. I have been in the end-buyer position at a double closing, and my attorneys have reported that the seller was upset that somebody made a quick profit on his or her underpriced property. The seller would rather have made that profit.
A few words of advice: check your state laws on disclosure in the case where you are flipping a property, as written disclosure may be required in your state.
Once the closing is over, you are the brand-new owner of the property. You get the keys, the leases, the deed, and letters of introduction from the seller. You will now proceed with your original plan for the property, which could be:
- Sell it right away.
- Rehab it and rent it.
- Rehab it and sell it.
- Develop it.
- Keep it as it is and manage it.
Whatever you do…enjoy the journey on becoming your own mini-mogul.