Real estate agents: How to help your clients chart a smooth course to closing

Realtors and buyers alike want a home purchase to go smoothly, but a range of circumstances can delay closing—from onerous documentation requirements to appraisal issues that may not come to light until you’re days away from closing.

Given the variety of obstacles that can arise, even your most seasoned clients may find it daunting to navigate the process. It can also be especially unnerving for first-time homebuyers, who are responsible for approximately a third of existing home purchases, according to the National Association of Realtors.

Fortunately, realtors can help pave the way for a smooth closing by asking their clients informed questions early in the process.

Five questions to ask clients to help streamline closing

From understanding pre-approval to lining up documentation and mentally preparing for potential issues, following are key questions you can ask to help your clients on the path to a smooth closing:

1. Have they been preapproved or prequalified for a mortgage—and do they know the difference?

The terms can sound indistinguishable to first-time buyers, and even seasoned homeowners may be rusty on the difference if they haven’t bought a home in decades. If your client seems unsure, explain that a prequalification is only the bank’s informal, ballpark figure of what they may be able to afford, whereas a preapproval is the more accurate estimate.

During the preapproval process, the lender runs a detailed credit check and requests proof of assets and income, which gives borrowers more confidence that their loan will be approved once they find their dream home.

2. Do they understand the process of buying a house?

If your client seems overwhelmed with the homebuying decision and doesn’t know where to start, some education on the process can help ensure they get all their ducks in a row before they get in too deep. You might suggest they read 10 Steps for Buying a Home for a simple overview of how to apply for a mortgage, schedule an appraiser, prepare for closing and more.

3. Is their documentation in order?

Once your buyers have filed their mortgage application, the underwriter will need to verify the details of their income, assets, debt and property. Make sure your client knows this process often takes several weeks, and that the lender may need to ask for additional input along the way. Encourage clients to answer lender questions as promptly and clearly as they can.

4. Are they aware of the factors that could cause financing to fall through?

Once a buyer receives pre-approval, it’s important that their financial picture remains steady. Any disruption, such as a change in job situation or drop in credit score, could impact final approval of the mortgage. After pre-approval is secured, buyers should postpone major purchases that would draw down their bank account balance and avoid activities that would impact their credit score, such as applying for a new credit card. And if unforeseen circumstances change the buyer’s financial situation, they should proactively discuss their options with the lender, rather than passively wait for issues to be discovered during underwriting.

5. Are they aware of their options if the appraisal comes in lower than the purchase price?

When the lender has the home appraised to determine its value, it’s always possible that the number may come in low. It’s important for a buyer to understand their options if that happens—they can either request that the seller lower the selling price, or pay cash for the difference. In some cases, it is also possible to get a more favorable second opinion from a different appraiser.

Realtors can help their clients feel confident in pursuing what may be the biggest purchase they’ve ever made. By asking thoughtful questions, you can help your clients get a clearer sense of the mortgage closing process—and ultimately support a positive outcome for all parties involved.