Why The New Three Day Closing Disclosure Rule Reminds Me Of The Army
The new Three Day Closing Disclosure Rule is now in effect, and it strikes an eerie resemblance to many of the "hurry up and wait" processes that I used to endure enjoy in the Army.
Hurry up and wait was a phrase used to describe the far-too-common practice of being hurried to arrive at a certain destination or complete a certain task by a specified time, only to then have to wait around for the next assignment (orders) to come along. Anybody who has been in the military can appreciate this concept.
Of course, I must acknowledge that our military has a reputation of being where it is needed, when it is needed, and these new changes are going to bring some positive results once the dust settles and everybody gets accustomed to a new way of conducting the real estate settlement process.
I urge our readers to digest the changes below so that they are not the losers who will certainly be exposed and exploited as these changes appear in the market.
3-Day Closing Disclosure Rule Changes
The simplest way to explain the changes (which are in effect for any contract executed on or after October 1, 2015) is that the government got fed up with an industry that was doing sloppy work.
Most people working in real estate brokerage and its related industries will quickly acknowledge that a home purchase or sale is one of the largest financial transactions a person or family will undertake in a lifetime, yet the consumer was being pushed to sign documents they had never seen at the final moments prior to taking ownership (or relinquishing ownership) of a home.
Now, thanks to the new three day closing disclosure rule, both home sellers and buyers alike will get to review the closing documents no less than 3 days prior to closing.
Of course, things are not so simple when you review all the documentation that goes along with the new rule change, and there are some procedural issues that your agent, lender, title provider, etc. will have to follow or the review period could be as long as 7 days. And once you are in that review period, no changes to the closing documents can be made. So if any party wants to make a change (lender charge, error correction, repair expense, etc.) to the closing documents, the three day waiting period begins anew. The buyer and seller will always get at least three days to sit on "the final documents."
The Impact Of The Three Day Closing Disclosure Rule Change
While there is no way to anticipate everything that is going to be changing from here on out, you can be certain that the next few months will be chaotic at the law firms, escrow and title companies, real estate companies, and mortgage banks that are involved with residential real estate transactions.
For the homebuyers that are working with Joe Manausa Real Estate and using our smart home buyer process, there will be nothing changing for you. Our process is even further defined than what the new rule change requires, and it will help save you money and avoid the pitfalls that the new three day closing disclosure will be presenting in the market.
Homebuyers who are not using our smart home buying process will need to get their ducks in a row before going house shopping, or it is likely they will see their first few contracts fall apart and they will lose thousands of dollars in appraisal and inspection fees on homes they do not actually purchase.
The government wants things done early, and this means prudent buyers will get their loan approvals prior to shopping for homes. No longer will lenders allow buyers to deliver documents a few days prior to closing, all paperwork must be submitted well in advance so that underwriters can do their jobs and get the closing disclosure documents prepared and hand delivered no less than 3 days prior to closing (not 72 hours, just three "days").
Home sellers will now need to understand that they cannot wait until the last second to finalize repairs ("the last second" is now "several days before closing").
Ultimately, a new normal will develop to where we conduct business the same way as before, but instead of rushing towards a closing date, we will be rushing towards a date that occurs three days prior to closing.
The final walk through inspections are likely to be an area that causes some problems, as no adjustments can be made to the closing disclosure after the three day period has begun, yet the majority of home sellers will be moving out the day before closing. I'm not sure it is realistic to believe that we'll get to a point where sellers move out a week before closing.
We like to say "why work with an agent when you can hire an entire real estate company?"
Because the changes that have and are occurring in the real estate home buying and selling process require more attention than a single person can commit.
The day of the singular agent has moved behind us, and consumers will be well-served to take the time to conduct multiple interviews before they make a decision on the real estate company that can best serve them during their move.
If you would like to see what the Joe Manausa Real Estate Company can do when you next sell and buy a home, simply follow this link to a contact form and we'll be in touch right away.