Avoiding A Delayed Closing
Avoiding a Delayed Closing
Congratulations offer has been accepted, but you’ll need to be aware of any roadblocks or setbacks that could delay closing. From appraisal issues to home inspections, many things can go wrong before closing. To avoid a delayed closing, be aware of these common issues that could set back your closing date.
Unless you’re submitting an all-cash offer, you’ll need to obtain financing to purchase your home. One of the biggest nightmares is that the mortgage falls through on the closing day. To avoid any financing roadblocks or a delayed closing, ensure there are no major changes in your financial situation from the time you’ve submitted your loan application to the day of closing, such as buying a new car. Make sure you know in advance how you will be getting a bank check or wire transfer, so you’re able to close on time.
The home appraisal is lower than the sale price
Since your lender will only give you what the house is worth, it’s up to you and the seller to determine how to make up the difference. There are a few options to resolve the situation and avoid a delayed closing.
- You can ask the seller to lower the price.
- You can make up the difference by spending money out of pocket.
- You can negotiate with the seller to meet you in the middle. In this case, the seller would lower the price, and pay the remaining balance in cash.
- You can challenge the appraisal and request an appraisal review.
Problems found during the home inspection
The home inspection is an important step in the home buying process and helps the buyer understand the home’s condition. It also acts as a safeguard by uncovering any major issues or repairs.
Ideally, the home inspection report would come back with little to no issues, but that isn’t always the case. If there are potential problems or damage, then both parties will need to reach an agreement to address these issues. Depending on the damage and the negotiation process, repairs could take longer than expected, pushing back the closing date.
Clouds on the title
Before you can close the deal, you’ll need to make sure that the title is clear. A title company or real estate attorney will conduct a title search, which examines all public records to determine the property’s ownership history and identify any clouds on the title. Clouds on a title are any encumbrances or unresolved claims that indicate a potential issue regarding ownership, such as liens or delinquent taxes.
A full title search (60-year search) should be ordered early in the process so that any potential title problems can be recognized and cleared quickly. If there are issues, there’s not much a buyer can do on their end besides waiting until they are resolved, and the title is cleared.
Delayed approvals from Homeowners Associations
If you’re purchasing a home that’s a part of a Homeowners Association (HOA), there are additional hoops you may need to jump through and documents you’ll have to fill out to close on your new home successfully.
The best way a buyer can avoid a delayed closing caused by approval delays is to submit HOA applications and additional documents or orders early on in the closing process. It’s crucial to keep a close eye on the status and periodically check-in as the closing date approaches.
The buyer is unable to sell their house
If a buyer currently owns a home, they may need to sell their old house before closing on a new one. This is a home sale contingency that allows the buyer to back out of the deal if the sale falls through on the existing home, or if it doesn’t sell by the specified closing date.
If the buyer or seller has trouble selling their home, the seller can include a kick-out clause contingency in the purchase contract so they can continue to market their home and seek a better offer. This also puts the seller in a better position to negotiate if a second offer arises.
Issues found during the final walkthrough
The buyer will have the opportunity to go through the property before taking over ownership. If you and your real estate agent encounter any problems, such as unfulfilled contingencies during the final walkthrough have a good chance of pushing back the closing date. Your real estate agent should be communicating with the seller’s agent throughout the process to ensure contingencies are being completed. The seller can also offer additional concessions to avoid a delayed closing or having the deal fall through.