Smooth Sale Procedure

6 Tips for a Smooth Real Estate Closing Process

Closing on a piece of real estate can be an exciting, but lengthy process. There are a lot of important steps to take that can have long-term ramifications. And if any of these important steps either don’t go through correctly or don’t go through at all, the deal can fall apart.

This is the main fear of anybody involved in buying a piece of real estate. Inspections cost money. Finding and working toward securing a piece of real estate takes time. Starting from scratch can be a big loss and be disheartening to a potential buyer.
Proper care and preparation — along with a title and closing company — can help make this process a lot easier. Purchasing real estate doesn’t need to be confusing and difficult.

Here are 6 things you can do to ensure a smooth real estate closing process:

1. Lock in Your Interest Rate
2. Secure Funds in Approved Form
3. Keep Lines of Communication Open for Representation
4. Review Any Inspection Documents
5. Give Yourself Time to Make Adjustments
6. Put Together a Closing Checklist

1. LOCK IN YOUR INTEREST RATE

   Your interest rate is likely to have a huge impact on the amount of money you pay over time. Most of us don’t have the capital on hand to outright buy a piece of property. This leads many to secure a large loan in order to cover the cost of the house.These interest rates fluctuate. And even though 1% might seem like a small amount, a fluctuation of this size can mean the difference of a lot of money.Lenders allow those looking to purchase real estate to lock in an interest rate for a certain amount of time. This protects you from the rate spiking before closing day, as long as you close within a predetermined amount of time.

2. SECURE FUNDS IN APPROVED FORM

   The seller will have certain stipulations regarding the manner in which they would like to receive payment. This is frequently in the form of a wire transfer or a cashier’s check. These will need to be procured prior to meeting with the title and closing company to sign the papers and complete the sale.

   Make an appointment at your bank beforehand — probably earlier on your closing day — to make sure these funds are available and ready to be transferred.

3. KEEP LINES OF COMMUNICATION OPEN FOR REPRESENTATION

   Your real estate agent, attorney, or title and closing company should be able to reach the representatives of the other party in the transaction whenever they need. There are a lot of moving parts in these transactions that will need to be discussed.

   It is essential for these lines of communication to be open to discuss any necessary procedures or forms that need to be provided in order to move forward in the process.

4. REVIEW ANY INSPECTION DOCUMENTS

   Home inspections are a standard requirement in a residential real estate transaction. Termite and other pest inspections may be done as well. These inspections will give detailed accounts of the state of the property and what can be done prior to closing.

   Both parties to the transaction should review these documents. The information contained within is important and will inform future decisions.

5. GIVE YOURSELF TIME TO MAKE ADJUSTMENTS

   Take some time off from work to make sure you have all of your necessities sorted out. This could be a day or two in the weeks leading up to closing day, as well as on the closing day itself.

   The findings in the inspections could necessitate changes to the purchase agreement. Documents will need to be altered and reviewed. Simple typos can be a big problem later on, so it’s best to give these the proper attention early.

6. DON’T BE AFRAID TO ASK QUESTIONS
   There’s a good chance you aren’t an expert on purchasing real estate. This is why you’re working with a real estate agent and a title and closing company. There are going to be terms and processes you don’t understand.

   Asking questions helps you feel more comfortable throughout the process. It also helps the professionals that are helping you to double check their work.

WORK WITH AN EXPERIENCED TITLE AND CLOSING IN ATLANTA

1031 Exchange

A 1031 exchange, also known as a like-kind exchange or a tax-deferred exchange, is a provision in the U.S. Internal Revenue Code that allows investors to defer paying capital gains taxes on the sale of certain types of investment or business properties, provided that the proceeds are reinvested into another qualifying property. The purpose of this exchange is to encourage investment and stimulate economic growth by allowing taxpayers to keep their investment capital working in the market.

Here’s how a 1031 exchange typically works:

• Sale of the original property: The taxpayer sells their investment property, known as the relinquished property.
• Identify replacement property: Within 45 days of the sale, the taxpayer must identify one or more replacement properties that they intend to acquire as part of the exchange.
• Acquire replacement property: The taxpayer must close on the replacement property within 180 days of the sale of the original property or the due date of their tax return (whichever comes first).

It’s essential to understand that to fully defer capital gains taxes, the value of the replacement property must be equal to or greater than the value of the relinquished property, and all equity from the sale must be reinvested.
Here are some important things to pay attention to when considering a 1031 exchange:

• Qualified properties: The properties involved in the exchange must be “like-kind,” meaning they are of the same nature or character. Most real property used for business or investment purposes can qualify, but primary residences and properties held primarily for sale (e.g., real estate dealerships) do not qualify.
• 45-day identification period: You must identify potential replacement properties within 45 days of selling your relinquished property. There are strict rules on how you can identify replacement properties, so it’s crucial to adhere to the guidelines.
• 180-day exchange period: The exchange must be completed within 180 days of the sale of the relinquished property or the due date of your tax return, whichever is earlier. This deadline is inflexible, so plan carefully.
• Use of qualified intermediary (QI): The exchange must be facilitated by a qualified intermediary, who is a third-party entity responsible for holding the proceeds from the sale of the relinquished property and using them to acquire the replacement property.
• Reinvestment requirements: To fully defer taxes, you must reinvest all the proceeds from the sale of the relinquished property into the replacement property, and the debt on the new property must be equal to or greater than the debt on the relinquished property.
• Tax consequences: While a 1031 exchange allows you to defer capital gains taxes, it’s essential to recognize that the taxes are deferred, not eliminated. If you sell the replacement property in the future without doing another 1031 exchange, you will have to pay the capital gains tax at that time.
• Consult with professionals: 1031 exchanges can be complex, and it’s crucial to work with qualified professionals such as tax advisors, real estate agents, and qualified intermediaries to ensure compliance with IRS regulations and to maximize the benefits of the exchange.

Remember that tax laws can be subject to change, so it’s always advisable to consult with a tax professional or legal advisor for the most up-to-date and accurate information pertaining to your specific situation.