The year always ends with a mad rush to close home buying deals.
Buyers and sellers want to settle in before it's time to deck the halls and fire up the menorahs and kinaras, so they truly can be home for the holidays.
Buyers also want to close escrow before the year ends so they can cash in on tax benefits that come with buying a home.
"If escrow closes prior to the end of the year, the deduction can be realized sooner," said Stephanie Noryko broker owner of Granite Financial Real Estate Loans, in Cupertino.
It's never a good idea to prolong the already tedious escrow process -- year end or otherwise.
Typically conducted by a title and escrow company, the escrow process involves a neutral third party, through which is funneled the paperwork, money, transaction instructions and other details of a home purchase or mortgage refinance. Following the terms of the sales contract, the escrow agent holds onto, and then exchanges, disburses and transfers deeds, other documents and monies related to the transaction.
The longer a transaction is in escrow, the greater chance for problems.
"Interest rates can rise, shutting out the buyer. Lending practices can change, also shutting out the buyer. The buyer might lose his or her job or have another reason back out. Natural and other disasters can happen. Any of these things can put an escrow on shaky ground," said Mary Pope-Handy a real estate agent with Sereno Group Real Estate Group in Los Gatos.
While the need for speed is essential, that doesn't mean to approach escrow with reckless abandon.
Here are some tips to put you on the fast escrow track.
• Don't bring funny money to the table. You should be fully approved -- not prequalified -- for the home loan. Financing in today's housing market is a major sticking point. You should jump through all the financing hoops before you open escrow. It's one less contingency to cover.
"Choose a lender that allows the broker to pay for the appraisal upfront so it is not necessary to wait for the truth-in-lending and estimate-of-closing-costs statements before ordering the appraisal," said Noryko
• Work with a real estate agent who is familiar with both local market conditions and mortgages suitable for your financial profile. The agent is getting paid to guide you through the escrow minefield and keep you apprised of any steps necessary to quickly get through escrow. An experienced real estate agent will be aware of potential snags and how to quickly unsnarl them.
• Don't give away rights, but don't dicker away escrow speed. Sign a sales contract with as few contingencies as possible. Contingencies are tasks that must be completed before escrow closes including property inspections, repairs and financing. Once the task is complete, you or your agent must notify your title and escrow company. Know all the contingencies and prepare contingency removal letters in advance. Later, add the date and hand deliver the letters as soon as the contingency is met.
• "Quick escrows are good as long as the buyer doesn't give up any rights and still has a full chance to inspect and investigate the property, have the appraisal done," and otherwise take due process steps to seal the deal, said Pope Handy.
• Before hiring a title and escrow company, obtain referrals from those you trust, especially those who've recently closed a satisfactory escrow. Get a referral to an escrow officer, not the company, advises Sandy Gadow, author of "The Complete Guide To Your Real Estate Closing" (McGraw Hill $19.95).
Shop around for the best price, but consider an escrow office that is conveniently located in the general vicinity of the home you are buying. That's both to save time and to have an escrow officer familiar with local market conditions, says Gadow, also publisher of EscrowHelp.com.
• As soon as escrow opens, line up homeowners insurance and other coverage, flood, optional earthquake coverage, etc. and give the policy information to your escrow officer so he or she can quickly verify coverage, says Noryko.
• Stick around. Don't even take a daycation. Stay in touch with your real estate agent, escrow officer or others crucial to the deal. Everyone should have all possible methods of contacting you including your home and cell phone (pager, if you still go there), instant mail and email. Alert family, friends and your employer, that you have a priority to close the deal as soon as possible. You need to be available at a moment's notice.
• Come prepared on closing day. You'll have several days to see the final documents, but on closing day come prepared with plenty of time, pencil, paper, a calculator, and an inquisitive, demanding mind. You are allowed to have your representative attend closing with you. That's typically your real estate agent. It's his or her job to see that the deal closes in a satisfactory manner.