Recently, I had the pleasure of sitting down with Jerry Dunnavant, founder and president of Covenant Real Estate Services and Chief Growth Officer at Brown Edwards, to discuss the current state of the real estate market and what buyers and sellers need to know about the closing process. What we uncovered might surprise you—and could change how you approach your next real estate transaction.The Market is More Active Than You Think
Despite what you might hear in the news, Jerry shared some encouraging insights about market activity. While it's true that interest rates aren't where they were a few years ago, the market is far from stagnant.
"I think the market is more active than what the news is telling us," Jerry explained during our conversation. He's seeing activity across both residential and commercial sectors. Whether it's people relocating to our area, first-time homebuyers entering the market, or commercial property transactions, deals are getting done.
Understanding the Interest Rate Reality
Let's address the elephant in the room: interest rates. Yes, we're currently seeing rates in the 6-7% range. For those of us who remember the ultra-low rates of a few years ago, this can feel discouraging. But Jerry offered an important perspective that I think everyone needs to hear.
"If you go back into the '80s, '90s, and even some parts of the 2000s, those rates in the 6-7% range weren't uncommon," he pointed out. In fact, there were periods when rates were in double digits. The historically low rates we experienced were actually the anomaly, not the norm.
The key question Jerry poses to his clients is this: Will you be making more money next year than you are this year? If the answer is yes—and for most people, it is—then waiting might not be the best strategy.
The Cost of Waiting
Here's something that doesn't get talked about enough: the opportunity cost of sitting on the sidelines. Jerry emphasized that rates are likely to drop eventually, but he's advising people not to let that paralyze them.
"If you're generating income, you're generating more funds to be able to make the payment, then the rate is not as big a deal to you as it is if you wait another year or two to be able to get that rate drop."
Even better, many financing options now include prepayment clauses that let you refinance without penalty when rates do come down. This means you can take advantage of today's opportunities without being locked into a higher rate forever.
Multiple Offers Are Still Happening
One of the most interesting things Jerry shared was that he's still seeing multiple-offer situations on properties. This tells us that despite the interest rate environment, demand remains strong. Good properties are still moving, and buyers are still competing for them.
Understanding the Settlement Process
Now let's talk about what happens when you actually get a deal under contract. Settlement—also called closing—is where all the documentation comes together, funds are transferred, and ownership officially changes hands. But there's a lot more happening behind the scenes than most people realize.
Jerry broke down the key components of what his team at Covenant handles during the settlement process:
Title and Due Diligence: Before you can close on a property, someone needs to verify that the title is clear—meaning there are no liens, judgments, or other issues that would prevent a clean transfer of ownership. This involves searching public records, identifying any problems, and working to resolve them before closing day.
Documentation Coordination: There's an enormous amount of paperwork involved in real estate transactions. From purchase agreements to loan documents, disclosure forms to transfer taxes, every document needs to be prepared, reviewed, and executed properly.
Funds Management: Perhaps most critically, settlement companies manage the flow of money. This includes the buyer's funds, the seller's proceeds, payoffs of existing mortgages, real estate commissions, and various fees and taxes. Everything needs to be accounted for down to the penny.
The Timeline: What to Expect
One of the most common questions Jerry receives is: "How long does this take?"
For residential transactions, Jerry typically sees closings happen within 30 to 60 days. Commercial transactions, however, are a different story—they can take 60 to 120 days or even longer, depending on the complexity of the deal.
Why such a wide range? Jerry explained that several factors come into play: the complexity of the title search, whether there are any title issues to resolve, the financing structure, and how quickly all parties can provide the necessary documentation and information.
The Foundation: Good Documentation
Here's something that might surprise you: the quality of your documentation can make or break your closing timeline. Jerry emphasized that having "good legal" in place from the start—meaning well-drafted contracts and clear agreements—sets the foundation for a smooth closing process.
Poor documentation, on the other hand, can create delays, confusion, and even jeopardize the entire transaction. This is why working with experienced real estate attorneys and settlement companies from the beginning pays dividends down the road.
Communication: The Secret Ingredient
If there's one theme that came up repeatedly in my conversation with Jerry, it's this: communication is absolutely critical.
"What 90% of life is communication," Jerry noted. "There's complexities, there's a lot of parties that are involved."
In a typical real estate transaction, you might have:
- The buyer
- The seller
- Real estate agents (sometimes two)
- Lenders
- Attorneys
- Settlement companies
- Inspectors
- Appraisers
That's a lot of people who need to stay on the same page. Jerry was candid about the challenges: "Most of the time, there's nothing intentional that's not being communicated. People have a lot going on in today's world."
Think about it from the settlement company's perspective. While you have one transaction to focus on, they might have 30 transactions happening simultaneously. This is why proactive communication on your end can make such a difference.
How to Set Yourself Up for Success
Based on Jerry's insights, here are the key steps you can take to ensure a smoother closing:
1. Communicate Your Funding Source Early
Are you bringing cash? Getting a mortgage? Selling another property to fund this purchase? Let everyone know on the front end. Don't assume your settlement company or other parties are aware of your funding situation. The more advance notice they have, the better they can prepare.
2. Use Your Realtor as an Advocate
If you have a good realtor, leverage that relationship. They should be communicating on your behalf and helping to coordinate all the moving pieces. However, don't assume they're handling everything—it's still your responsibility to ensure everyone is informed.
3. Respond Promptly to Requests
When your settlement company, lender, or attorney asks for documentation or information, respond as quickly as possible. Delays on your end create delays in the overall timeline.
4. Don't Assume Everyone is on the Same Page
This is crucial. Just because you've told your lender something doesn't mean your attorney knows. Just because your realtor is aware doesn't mean the settlement company has been informed. Make sure key information is shared with all relevant parties.
Jerry made an excellent point that applies across all types of transactions, not just real estate: "The client thinks we're all communicating and I know everything. That's not necessarily the case."
At Brown Edwards, we deal with the same thing when clients are selling a business or working through complex transactions. We're dealing with attorneys, banks, and other professionals. The client thinks we're all communicating, but I may not have seen the legal documents that the attorney prepared, or I may not have the updated valuation or sales price they're looking at. Communication is key across all types of transactions.
Special Considerations for Complex Transactions
If you're involved in a commercial transaction, a 1031 exchange, or any deal with multiple parties or unusual structures, the communication needs become even more important. These transactions often involve additional professionals—CPAs, financial advisors, exchange intermediaries—and coordinating everyone requires extra effort.
At Brown Edwards, we frequently work alongside settlement companies like Covenant on complex transactions. I can tell you from experience that the deals that go smoothest are the ones where clients take an active role in ensuring everyone has the information they need.
The Bottom Line
Whether you're looking to buy your first home, upgrade to a larger property, invest in commercial real estate, or sell a property you own, the message is clear: the market is active, and opportunities exist.
The current interest rate environment, while higher than recent years, is historically normal. If you're generating income and see a property that meets your needs, waiting for the "perfect" rate could mean missing out on the right opportunity.
And when you do move forward with a transaction, remember that settlement doesn't have to be stressful. With the right professionals in place, good documentation, clear communication, and realistic timelines, you can navigate the closing process with confidence.
At Brown Edwards, we work closely with professionals like Jerry and his team at Covenant Real Estate Services to help our clients navigate these complex decisions. Understanding the tax implications, structuring transactions properly, and timing your real estate moves can make a significant difference in your overall financial picture.
If you're considering a real estate transaction and want to ensure you're positioned for a smooth closing while maximizing your tax advantages, I encourage you to reach out. The market is moving, and with the right guidance, you can position yourself to take advantage of the opportunities available today.
Evan Ross is a Tax Director with Brown Edwards & Company based in Roanoke, Virginia. For more information about real estate tax planning strategies, contact Evan or visit the Brown Edwards website.
