One of the most exciting times in life is the real estate closing process and happens after you’ve found your dream home, had your offer accepted, and are eagerly awaiting closing day. After all, that’s the day you can get your keys and start moving into your new home!
So when closing day is suddenly pushed back, it can be pretty disappointing. But it’s an inconvenience that you should plan for, as there are so many moving parts in the real estate closing process that it’s not surprising when something goes wrong and delays closing day. According to the National Association of REALTORS, 22% of closings in April 2021 were delayed, down slightly from 25% in 2020.
The good news is that there are some steps you can take to reduce your chances of closing delays. You have to get familiar with the real estate closing process, starting by learning about the most common reasons for closing delays—and how you can prevent them.
One of the most common reasons for closing delays involves the home loan. In fact, REALTOR Magazine found that this is the number one issue behind closing delays, as 32% of problems involve the process of getting financing.
In many cases, it’s as simple as the lender missing one or more documents that you need before you can qualify for the loan. This can happen even if you’re pre-approved, as the lender will still need to review your details before closing. And if anything has changed with your financial situation, the lender will need additional documentation.
For example, if you make a large purchase in the weeks leading up to the closing day—and you suddenly don’t have the amount in checking or savings that you did when you were pre-approved—your lender might have questions or concerns. You’ll likely be asked why you made the big purchase and whether this will affect your ability to afford your new house.
The same goes for opening a new line of credit or switching jobs in the middle of the real estate closing process. These sudden adjustments could change the numbers in the formula the lender uses to determine if you qualify for a loan.
Your lender will likely request a letter of explanation, adding days or weeks to the real estate closing process. Don’t make any big changes to the amount of debt or income you have until you’ve closed on the loan. You should probably wait until closing day has passed to order that new washer and dryer set for the house!
A significant part of the real estate closing process is the title search. This is when a title agency checks the house’s title to make sure the seller is legally the owner and has the right to sell the property to you.
If there’s a lien on the property or another party has legal rights to the house, this could delay or cancel the sale. One survey found that 12% of delayed closings target=”_blank” result from title issues.
While you might not be able to avoid title defects altogether, you can reduce the chances that they’ll delay the closing by getting a title search done early on in the real estate closing process. If you put this task off until just before closing and the title agency discovers any title defects, your closing date may need to be pushed back days or weeks until the issue is solved.
It’s common for buyers to request that sellers repair the house before closing day. But sometimes buyers leave the repairs to the last minute, leading to the possibility that they won’t be done on time.
After all, there are often delays with contractors in the construction world, so it’s not unusual for a repair or renovation to take longer than expected due to shortages of labor and materials, permitting problems, scheduling issues, etc.
While you can’t necessarily control how long repairs take, you can reduce the odds that the real estate closing process will be delayed by staying up to date on the progress of property repairs. Your real estate agent should closely follow the repair process, so make sure they know to request updates from the sellers long before closing.
If it’s nearly closing day and the mortgage loan process is nearly complete–but you find out that the repairs are not done–you will have some decisions to make. You could opt to wait a little longer and reschedule closing day until the repairs are done, or you could cancel the sale altogether, depending on your contract. Either way, ensuring the repairs are done on time will keep the real estate closing process on track.
Another reason for delays in the real estate closing process is the inaccurate documents you’ll be signing–especially the loan documents! Whether your name is different on some paperwork or there are some disparities in the closing numbers, these seemingly minor issues can cause significant problems in the closing timeline, particularly when securing a loan.
Once you or someone else notices any inaccurate information on the loan documents or any other paperwork, the documents will have to be changed and reprinted for you to review and sign. This could delay the closing by anywhere from days to weeks, especially if the inaccuracies could change the amount of money you’re approved to borrow or the amount you’ll be paying at closing. So make sure you’re keeping a close eye on the accuracy of the loan paperwork as you move toward closing day!
Sometimes, the real estate closing process is going just fine, but unrealistic dates set by buyers, sellers, and agents make it seem delayed. For these reasons, you should make sure any deadlines you and your agent have set are realistic rather than rushed and unworkable.
Remember that the average real estate closing process takes anywhere from 45 to 60 days once the seller accepts an offer. So if you’re expecting to close any sooner than that, you’ll likely face some delays, as you can’t always rush the mortgage loan process.
This is why it’s so important to work with an experienced real estate agent. They can tell you what kind of timeline is realistic for the real estate closing process — rather than get your hopes up by telling you it will take a month or less to close!
The right real estate agent can also keep you on track to get all your tasks done by closing, such as preparing to pay closing costs and finding homeowner’s insurance for your new home. If you still need to find a home insurance policy, LemonBrew Insurance can give you a quote on the right policy for your property.
And if you’re ready to discuss which mortgage loans are right for you — or even get pre-approved to try to reduce closing delays — contact LemonBrew Lending today to get started! Our team would be happy to let you know which loan might be best for you, help you apply, and prepare all the paperwork you need to ensure the closing process goes smoothly for you.