6 Ways to Avoid a Delayed Closing

Gone are the days of the guaranteed 30-day closing. Though not impossible, in light of tighter mortgage regulation a 30-day closing is no longer the norm. Realistically you’re probably looking at 45 days from contract to close, and that’s without additional contingencies. Even with this extended contract period there are a number of things that can throw a monkey wrench into the process.

Closing delays aren’t exactly commonplace but they do occur. A delayed closing could be a minor setback or a major hassle, but either way it’s rarely pleasant news for any of the participants.

Contracted closing dates are set for countless personal and financial reasons. Home buyers might be at the end of a lease, under the gun with a closing date on the home they’re leaving, being transferred, or making an effort to get kids enrolled in local schools. Home sellers are likely moving on to their next residence, or maybe building a new home, downsizing or relocating. Both parties to the contract have a financial stake in a timely closing. In addition, closing costs for both will most certainly be affected. A postponed closing can even result in an invalid contract.

No one is ever anxious to start the process all over again so it’s advisable to be aware of common roadblocks right up front, and how best to navigate them.

6 Ways to Avoid a Delayed Closing

By Barbara Pronin

According to the Realtor’s Confidence Index, seventy-five percent of home sale transactions closed on time in June 2018. That means 25 percent of agents surveyed reported a delay in getting to the closing table.

What are the main causes of such delays, and how can you best avoid them?

1. An impractical closing date – Depending upon the buyer’s purchasing options, the number of contingencies in the offer, and other variables, it typically takes 45 to 60 days for a closing to occur after the seller accepts the purchase offer. Setting an unreasonable completion date based on the factors involved can set up disappointment for all.

2. Appraisal issues – Delayed closings are often dependent on unexpected appraisal problems. For example, the appraisal comes in lower than the purchase price, or damage is revealed that must be repaired or addressed before closing. The savvy agent has done due diligence on price and addressed any likely appraisal issues before sending a transaction into escrow.

Author’s Note: Appraisals are inherently subjective, and though a contracted price may be thoroughly researched and documented, unforeseen issues and variable judgements may arise. It is never advisable to take for granted, a contracted home price or supposed property value.

3. Title-related issues – As your title partner, your title company is committed to researching and clearing title issues as quickly as possible. But some issues may take more time to be resolved, or even cause a transaction to fall through. Delays in closing can be mitigated when the agent ensures that clients are aware of any outstanding issues as early in the transaction as possible.

4. Additional documents are needed – When buyers receive their mortgage commitment, it is easy to assume the funds are authorized and the closing will proceed as expected. But there are times when lenders request additional files at the last minute, which could result in delay. As the agent, be sure your transaction packet is complete – and work closely with your buyer to ensure the timely submission of requested documents.

Author’s Note: Your mortgage approval is not the end of the road. The lender must also approve the property and all documentation pertaining to it. Only after all of these elements are inspected you will receive the “Clear to Close”. The information that a mortgage lender will request from you is a requirement, not a suggestion. The quicker you submit the necessary documentation, the quicker you will receive your “Clear to Close”.

5. Unresolved property damage – After completing the property evaluation (Home Inspection), the buyer may demand certain repairs or may ask the seller for concessions instead of repair work. It’s critical that the seller makes good on whatever has been agreed upon before the planned closing date.

6. Final walk-through issues – Given that most final walk-throughs take place a day or two before closing, it stands to reason that unresolved or unforeseen issues may force a closing delay. The seller’s agent should check before the final walk-through to see that any requested repairs have been satisfactorily completed. The buyer’s agent and their client should check together for any faulty repairs, electrical or plumbing issues, or other problems that may need to be addressed, hopefully without delaying closing.

Barbara Pronin is an award-winning writer based in Orange County, Calif. A former news editor with more than 30 years of experience in journalism and corporate communications, she has specialized in real estate topics for over a decade. Reprinted with permission from RISMedia. ©2018. All rights reserved.