A close date can sometimes feel like a carrot on a stick, especially in the beginning of your real estate investing career. Early on, you’re likely focusing on one or two deals at a time, which puts more emphasis on those few properties. As you get closer to close, that’s likely all you’re thinking about—and that can start to wear on you. When you first start out, it feels like there’s always one more step before THE CLOSE. There’s always one more inspector, appraiser, lender or attorney to weigh in on everything from the contract to the sale price to the work needed. There’s always one more hoop to jump through. There’s often one more thing you need to do. And, often, all of that pushes your close date further and further down the road.
I know the feeling. During those first few months as a real estate investor, you’re 100% focused on that date, with little else to distract you. But in time, the path to close gets easier, and because you’ll have more properties swirling around in your portfolio, there will be lots more to keep you occupied. Close dates will come and go with relative ease—sometimes a close will even sneak up on you, believe it or not.
Until then, though, how can you keep your paths to close streamlined and hassle-free? Right out of the gate, be prepared and take charge. This will all but ensure a quick and successful close, so you can stop stressing and start flipping more deals successfully.
#1. Be Realistic About Your Timelines
You’ve likely seen bandit signs all over town, screaming with offers to buy houses for cash—in three days. While it’s possible—I’ve had my fair share of three, four and five day closes—all of the pieces really need to fall into place perfectly to close on a property that fast.
- You’ll need to have your financing shored up so you can make—and fulfill—a cash offer on the spot.
- You’ll need to have your paperwork at the ready, and a motivated seller willing to sign right now—and close fast.
- You’ll need to have a home inspector on speed dial, who can drop everything and come walk through the property with you.
That’s just the tip of the iceberg, too. My point is, there are a lot of moving parts to any close, even the simplest one. So don’t walk in and assume you’ll be closing by the end of the week. If you can and are able to, great. If you, the seller or the circumstances dictate a slightly longer timeline, don’t worry. It’s better to construct a realistic timeline early on then to keep pushing close back further and further and further.
Often this involves just listening. What does the seller need to be comfortable with this deal—successful, even? How quickly can you assemble your team and take action on this flip? Is your financing in place, or do you need a few days—weeks, even—to tie up any loose ends? Walk through all of the different aspects and players and map out a path to close that makes sense, and don’t worry if it starts to get a little lengthier than you originally expected.
To give you a sense, most real estate investors I know aim for two to four week closes, which gives them enough padding to ensure they’re dotting every “i” and crossing every “t.” I even know a few who shoot for the latest possible close date they can negotiate, knowing they’ll be able to fill in that time with other deals that require shorter closings. If you’re working with a traditional bank or lender, you may need that much time just to get your financing underwritten and approved.
#2. Understand Your Seller’s Motivations
A motivated seller is the best. Not only are they even more eager to close the deal than you are but, often, they’ll help you facilitate every aspect of close, from letting your contractors in during the day to agreeing to schedules that make sense for you and your business. But it’s more than just finding a motivated seller. You need to understand what makes that seller tick so you can best steer the closing process.
By understanding a seller’s motivation, you’ll be able to construct a deal and a timeline that makes sense for both sides which, in and of itself, can help you get to close even faster. You’ll also be able to leverage them—and their desire to close—to really get a good, honest assessment of the property and any potential issues, which can help speed up close. For example, ask about title and lien issues early on. While some sellers may be reluctant to share, gently explain that these will come out during the due diligence process and by understanding the lay of the land now, you can better prepare and better structure your deal. Same goes for major structural issues. Don’t be afraid to ask and to remind sellers that this information helps you get to close—it doesn’t (necessarily…) hinder you or the deal.
#3. Set The Groundwork for a Successful Close
From the minute you consider looking at an investment property, there are steps you can take to speed up your close. For starters, be sure to have your financial path locked up. While you won’t be able to get a firm commitment from lenders until you have a property (in most cases…), you can start talking to lenders and getting a sense of who’s who and what’s what. What do your top lenders need to OK your latest deal? Is there anything you can get into place now so you won’t be rushing around in a few days or weeks? Is there anything your real estate agent or contractor knows about the property that could delay things? Are there natural delays coming up—holidays, inclement weather or peak vacation seasons—that could stall the inspection, funding or overall closing process?
In some cases, you’ll discover, you can do a lot to push various elements in your favor—you can get your financial documents situated, for example, so they’re ready to go to a hard money lender. But, of course, you can’t control the weather (or the holiday schedule or the undisclosed issues with a property…). You can, though, plan for them. Bumps in the road are inevitable in this industry. If you can spot potential hiccups early and start to, at the very least, mentally plan for them, you’ll be in good shape and, likely, can craft a smart, strategic close schedule that makes sense.
We’ll unpack every element of close, from making an offer to inspections and appraisals to signing on the line, at the Nick Vertucci Real Estate Academy (NVREA). This is such a critical element of the process no matter where you are in your real estate investing career. I want to make sure every graduate walks away with a solid understanding of the process and the essential steps involved — plus, of course, how to get it all done with fewer headaches and in less time. Check out my site to see when we’re enrolling the next class, or to see when my team and I will be in your neck of the woods.