The purchase of a home becomes much more real after an offer has been accepted. It’s at this point where a lot of the gears involved in a real estate transaction begins to turn. From appraisals and home inspections to title searches and financial considerations, there is a lot to get done in short order. It also means that things can go awry and a delayed closing becomes a possibility.
Some minor issues can cause little to no delays. Other issues can stop the process entirely and cause weeks or perhaps even indefinite delays. For example, if a buyer has already sold their existing home, a delayed closing can essentially put them in a state of homelessness. With new jobs, school, moving trucks and furniture/appliance deliveries all lined up, a delayed closing can be both emotionally and financially taxing.
We’ve identified several issues any buyer should keep an eye on which can cause delays. The sooner they are spotted and handled, the faster a closing can get back on course.
Most homebuyers require financing to buy a house. It is up to the buyer to ensure that little to nothing changes with their financial picture between a pre-approval and the date of closing. Income sources should remain intact, and large purchases where additional financing is required, such as a car, should wait. These types of changes can throw off the calculations that lenders use to determine your ability to pay them back, and a bank can pull their offer to extend a loan as a result.
Be up front with your loan officer and ensure that your proverbial house is in order. Ensure there are no back taxes, past due child support payments, etc. which might trigger a lien on your income. If something changes with your job status or overall financial picture, ensure you reach out immediately to explain the situation to avoid a delayed closing.
A significant step in any real estate transaction is the appraisal, which determines the value of the property at hand. Issues can sometimes arise when an appraisal comes in lower than the agreed upon purchase price. This is because lenders work with the appraised value, not the purchase price. Any number beyond the appraised value needs to be negotiated between the buyer and seller, which can add complexity to a closing.
Inspections are performed for the benefit of the homebuyer to ensure that the home is in livable condition and does not have any health or safety concerns, such as structural damage, electrical/mechanical issues, mold, etc.
Inspections can reveal significant issues which need to be negotiated between the buyer and seller. In extreme cases, issues like mold, structural issues or roofing repairs can take weeks, if not months, to sort out.
Any real estate transaction should have a comprehensive title search performed. This process will ensure that there is a clear title on the home and that there are no liens, tax issues or claims against a property which might delay the transaction from taking place.
Along with a survey, the title search can also reveal any easements or other issues which might cause a delayed closing
Home sale contingency
A common contingency in a residential real estate transaction is an escape clause for the buyer should the sale of their current home fall through for any reason. These are often used as the buyer needs the proceeds from the sale of their house to close on the new home, or they simply cannot cover the cost of two mortgages.
The buyer’s ability to navigate their home sale is critical in these transactions – any delay can put the new home purchase on hold. As an aside, for properties with multiple offers, a seller can look for offers with these types of agreements and choose to avoid them. Any ability to remove this requirement from your offer will help to avoid delays and make your offer more attractive to sellers.
Final Walk Through
A final walkthrough is performed by the real estate agent and the buyer, typically the day prior to or the day of closing. The purpose is to confirm that agreed upon repairs have been performed and that the home is as expected.
This also creates an opportunity for delays. For instance, the seller may have agreed to certain repairs based on the home inspection and didn’t do them. Or, they may have specified that all kitchen appliances would stay in the home but they are now gone.
If you experience a delay in a home purchase, don’t be too alarmed. Indeed, about 25% of all real estate transactions experience some sort of delay. The best thing any buyer can do is to stay involved in the process, communicate often, do their part to smooth out any potentially bumps in the road and to be mentally prepared for delays.
Principle Abstract works tirelessly for homebuyers to ensure that their purchase is in order and that any threats to a timely transaction and is properly communicated and handled. Trusted by dozens of area agents and lenders, Principle Abstract prides itself on our attention to detail and ability to navigate any title issue at hand.
For more information or to get started on a real estate transaction, contact us today.