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4 weird closing glitches (and how to avoid them)

If your home has been on the market for a while, you're probably dreaming of the day you receive an offer that you can accept. But reaching an agreement doesn't mean your home is as good as sold.

A number of problems, from title issues to funding problems, can delay the closing of a home that's under contract, or even cause the deal to fall through, says Cynthia Jones, a real estate attorney with Horack, Talley, Pharr & Lowndes, P.A., a law firm in Charlotte, N.C.

Here are four weird glitches that real estate experts say could doom a home sale, and ways to make sure they don't happen to you.

1. You have a lien

If you're selling your home, any unpaid bills you have from delinquent property taxes, homeowners association dues or even past remodeling work could come back to haunt you, says Jones. That's because the creditor may put a lien on your home until the debt is satisfied.

"The closing attorney gets the contract and runs a title search," says Jones. "They will find those (liens) in the public record, and all of them will need to be cleared up in order to give the new buyer a good title."

This usually means paying outstanding bills. But if you don't have the funds, you can try to work out an agreement with whomever you owe money to. "In many cases, the seller can attempt to negotiate with the other parties to try to get the payoffs reduced so they can complete the sale," says Jones.

2. Termites!

Many buyers will have a home inspected for pests and other defects before they agree to close the deal. If you're a seller and you're not able to prove that your home has been treated and is termite-free, the buyer may be able to back out of the deal, says Barry Hildebrandt, broker/owner of WCI Real Estate in Riverside, Calif.

"Many home sale contracts are drafted with contingencies that allow the buyer to inspect the home before going through with the sale," he says.

If the buyer determines that thousands of dollars of work is required to get rid of a termite problem, they may want to push back the closing date to allow the seller time to get rid of the bugs, or at least negotiate who'll be responsible for doing the task, he says.

3. Renters in residence

If you lease your home while you're trying to sell it, you now have a third party involved. In order to prevent closing-day glitches, make sure your lease agreement provides enough time for your tenants to move before you close on the property and hand the keys over to your buyers, says Jones.

She suggests scheduling the closing at least a few days later than the end of the lease term, so the buyer can have time to make an inspection of the property after the tenant moves out.

4. Parties don't have enough money for closing

While affordability may be at an all-time high given today's low mortgage rates and rock-bottom home prices, buyers should still be preapproved for their loans in order to help make the process go more smoothly.

Even then, glitches can occur. The buyer may need to come up with additional funds to cover some closing costs, such as the title search, home inspection and pro-rated HOA dues. If the buyers have not properly calculated how much they'll need to bring to closing, they may be a few hundred or even thousand dollars short and not able to complete the deal.

Sellers can have financial issues, too. If the sellers are underwater on their mortgage, they may have trouble coming up with the funds to pay off their own loan at closing, says Jones.

"A few have borrowed from their 401(k) plans to cover the shortfall, but it takes time for those funds to arrive and that can delay closings," says Jones. "The entire process can take a couple of weeks, which could cause problems with closing." To avoid this, she suggests making sure both parties have a clear understanding of the amount of money that needs to change hands at the closing, and when it's required.

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