Top 5 Delays of Close of Escrow
The infographic below courtesy of the California Association of Realtors explains some of the most common reasons for a delayed settlement.
Looking ahead to the spring, expect a busy time with many homes coming for sale in a busy market. With this in mind, avoiding these hurdles can really help real estate buyers have a quick, smooth closing process.
Issues related to obtaining financing:
Many buyers get preapproved, which means getting a written loan commitment from a bank saying it will provide you with a mortgage for a certain amount of money. This is a smart move and helps make the financing process go smoothly but there are still problems that can arise and prevent the loan from closing. If the loan application was inaccurate, interest rates go up sharply, your job situation changes, or the borrower’s credit score changes it could result in the closing process being drawn out to fix any problems.
Once a home goes into contract, the bank has to be assured that the value of the home is equal to the price paid. The appraisal does this by comparing the sale price to recent sales of comparable homes. If the appraiser deems that the price is too high, it can cause issues with financing the home purchase.
Home inspection/environmental issues:
Most purchase offers have a contingency written into them, so that if the inspection reveals serious problems, the buyer can back out of the purchase. Based on the home inspection a buyer may want to renegotiate the price or ask the seller to perform repairs prior to close of escrow. These negotiations and repairs can delay the closing process.
Title insurance is provided so that the buyer’s ownership is free of defect and that no other person can claim ownership. Sometimes in that process a discrepancy or error in prior transfers is discovered. Resolving these issues can take time to find the prior owner to clear the issue.
Contingencies stated in the contract
Other contingencies such as selling a home or paying off a debt can delay closing as well.
Doing your best to avoid these issues can lead to a quick closing and aid in success whether you are purchasing or selling a home.