In real estate few things strike fear into agents, lenders, and title officers like the dreaded "domino" closing. It's likened to the boogie man and once you've had one, you'll probably talk about it for years to come. So what exactly is it?
To learn more, we chat with Jemme Pherigo, our resident closing expert. Jemme has been with Papasan Properties for over four years as the Closing Manager and has handled nearly 500 transactions during that time.
What is a "domino" closing exactly?
J: A domino closing is the nickname for a transaction in which the clients are both closing on the old home and buying their new home all on the same day.
Why are these types of closings so tricky?
J: If everything doesn't go as PERFECTLY planned and the banks/lenders are not able to fund the transaction by 5pm, the client does not get their keys. With your average real estate transaction there is at least 250 things that can go wrong during the process. During a "domino" closing you are doubling the amount of things that could go wrong. The clients need the proceeds from the sale of their home in order to purchase their new home, so you need the one closing to go smoothly in order to fund the other.
Have you dealt with one of these transactions before?
J: Yes, to be successful you must have a trusted team of lenders and title agents that will work closely with you and keep the lines of communication open. During the process, I am literally on the phone several times a day double-checking to ensure everything is progressing as scheduled and handling any foreseeable setbacks before they become an issue.
In one particular case, we had clients that insisted not only on a domino closing, but also attempting it on a Friday which meant that if there was a complication they would not have a place to stay for the weekend. To tackle this risky closing, we had the closing of their current home scheduled for first thing in the morning, and then the second closing scheduled for right after. We asked the escrow officer to take care of the funding paperwork first and then send it over to the lender immediately, rather than waiting until the end of the closing (usually an hour) to be over before getting funding started.
These types of situations are exactly why it is so important to have a great relationship with a lender. A lender who has the same high standards of customer service and attention to detail as you do. We also made sure both title companies had each others information and were communicating to get the funds transferred quickly. We were relentless about staying on top of the transaction from start to finish.
How did it all work out?
J: Both closings funded on time, the clients were able to get their keys, and move in to their new home. Homelessness avoided!
Any last tips for homeowners considering this type of closing?
J: First of all, we NEVER recommend closing on two houses on the same day because of the logistical nightmare. And especially not to try it on a Friday. We understand how stressful it can be when things don't go exactly as planned and do not want our buyers living out of suitcase in a hotel room for the weekend.
Our goal is to shoot for closings on Tuesdays, that way it gives us enough time to work out issues that sometimes pop up towards the end that are out of our control. That being said, if a client is determined to move ahead with a "domino" closing, we have the expertise and resources to handle it.