Closing on a home seems pretty straightforward. You list a home, find a buyer, accept the offer, and you both agree to the terms in the contract and sign it. Easy, right? Yeah, not so much! Once you and the buyer sign the agreement, the closing process starts- and therein lies the rub. And while the process typically takes 30-60 days, the process may not move as quickly as you anticipate. In fact, a study has shown that about 19% of home closings experience delays. Keep reading to learn more about home closing delays, their causes, and solutions.
- The average home sale can take 30-60 days, but the transaction may experience delays in between.
- Out of the delayed contracts, the most common causes are financing issues (37%), appraisal issues (18%), and inspection issues (16%).
- There may be cases where there are claims to the title, or a seller forgoes hiring a real estate agent to help with the sale, causing delays due to aspects like setting unrealistic dates.
Home Appraisal Issues
Any lender will require an appraisal to verify the house is worth the price the buyer agrees to pay for it. That’s because the lender is taking a risk and needs to be reasonably sure of their ability to recoup their losses should the buyer default on their loan.
And as home prices have been increasing to record highs in the last three years, appraisal gaps, in which the appraised value is less than the agreed-upon purchase price of the house, have become more common. Moreover, you may be tempted to list your home at a higher price. Unfortunately, a NAR study has shown that 21% of delayed contracts are caused by appraisal issues.
To avoid home appraisal issues, work with your real estate agent to set a fair price for your home. Your real estate agent will help you analyze the recently sold comparable homes in your area to determine the right price.
Several issues may arise from a title search on a home for sale that should be addressed before the house is legally transferred to the new owner. A title search can uncover several common property issues tied to your home, including an active bankruptcy, a contractor’s lien, taxes on the house, or a child support lien. And while resolving these issues, for instance, a contractor’s lien can be fairly typical, it might cause a closing delay if the contractor cannot be found to settle it. Extra remediation required by the title company might take longer than the closing date, resulting in a contract extension.
To minimize clouds in the title search, you should try to be proactive. That means you should pay off any debts associated with the house. You should also consult your real estate attorney to review all pertinent docs for red flags before listing your home on the market.
Home Inspection Issues
A home inspection is one of the most critical steps of home selling and one of the strongest variables affecting home closing. Over 88% of home buyers will request a home inspection before home closing. The inspection involves assessing the property for any damage and identifying necessary repairs. If significant issues arise during the inspection, such as foundation problems and pest infestations that are costly to reconsider the offer price, there may be a need for contract negotiation, which can result in home closing delays. To avoid delays caused by a home inspection, you may want to consider requesting a presale inspection (a home inspection before you list your home). That way, you can make the repairs before listing your home.
Buyer’s Financing Issues
For many buyers, financing a home through a lender with a mortgage is necessary to buy the house. Since the entire hinges on securing this mortgage, it’s a top aspect that affects closing and can, in fact, cause 37% of home closing delays.
There are different ways that securing a mortgage by the closing date can be challenging. The buyer’s credit score or income can change, causing the lender to reject the mortgage application. If the lender can’t grant the buyer the mortgage by the closing date, the closing may delay, or the contract could be canceled or expire if you don’t agree to an extension.
To avoid financing issues, ask the potential buyers to be preapproved for a mortgage before even submitting an offer. You can ask the buyer to also take one more step and get pre-underwritten for the mortgage, which will then offer more security for you.
Not Working with a Qualified Real Estate Agent
Enlisting a licensed and skilled real estate agent is invaluable in the home selling process. And not relying on their expertise for guidance and negotiations during the process can result in huge missed opportunities.
That’s because selling a home is a complex endeavor. A real estate agent can help outline almost any of the abovementioned issues. They’ll help you negotiate home repairs required after the home inspection and contingencies included in the contract, as well as recommend real estate attorneys. Not taking advantage of these services could set back or derail your home closing. To avoid this issue, you should hire a reputable real estate agent with a proven track record for a successful home purchase in your area.
Avoid Home Closing Delays!
An excellent way to ensure a smooth closing is to understand what to expect at closing and how to avoid home closing delays. If you have any questions about closing, or the entire home selling process, contact our real estate experts. We’re highly trained and vastly experienced in real estate transactions and can guide you on the home closing delays you can anticipate and how to dodge them. Call us today!