One of the most difficult things to manage during the home buying, selling, or closing process is time. According to the National Association of Realtors 2015 Profile of Home Buyers, the average buyer spent 10 weeks searching and looked at a median of 10 homes.
Once you have found a home and entered into a purchase agreement, how long it will take to close will be determined by the contract, which will specify a closing date. Typically closing dates are scheduled 4 – 6 weeks from the contract date if financing is involved.
Part of the closing process involves choosing a competent lender with the best mortgage terms available, as well as selecting a closing attorney, preferably one that specializes in real estate law. Whether you are buying or selling, in order to make the most efficient use of your time. Consider the following…
- What exactly do you want in a house
- How much can you afford?
- Set a realistic list price
- Choose a competent real estate agent
- Choose a qualified mortgage lender
- Select a closing attorney who specializes in real estate
A professional real estate agent can guide you through the home buying and selling process making sure all of the designated time frames are met while minimizing any problems that can hold up a closing. There are closing costs to be paid by the buyer and seller. Choosing the right realtor can also reduce closing expenses by negotiating some of these costs on behalf of their clients.
Unfortunately, there are a number of things that can delay the closing process. Once the property is in escrow (this is the time between the offer being accepted and the actual closing), there are many issues that come up that can cause delays.
Below are some of the most common issues that buyer or sellers could face during this period and what can be done to possibly prevent them happening…
Home Inspection – It is highly recommended that all home buyers get a home inspection prior to purchasing the home. The purchase contract should include a due diligence period allowing the potential buyer the opportunity to have all their relevant home inspections done and to do their due diligence to make sure there are no issues that would stop them from wanting to purchase the home. Home inspections normally reveal repairs and issues the sellers are not aware of, and sometimes sellers get offended by the buyer asking for repairs. If the repairs are more than the buyer is willing to deal with and the seller is not willing to do the repairs, then the buyer will have the option to terminate the contract and receive their earnest money deposit back.
Termite or Pest inspection – A buyer could require a clear wood infestation report to make sure there is no active infestation. The cost of a pest inspection is usually around $75 to $100. If termites are detected, the deal could fall through. It’s actually in the best interest of the buyer to have a pest inspection before the end of the due diligence period. After all, purchasing a home, however large or small, is a major investment.
Appraisal – If a loan is involved the lender will require an appraisal be completed on the property in order to protect their investment. The mortgage company wants to make sure the home value is at least what the buyer is paying for it so they can recoup any losses in the unfortunate event the buyer would default on the mortgage. There are three options if the appraisal comes in below the sale price…
1) The seller can reduce the sale price to the appraised value
2.) The buyer can pay the difference in cash
3.) The parties terminate the contract
Financing Falls Through – One of the main reasons closings are delayed, or even worse, terminated, is due to the buyer being unable to obtain financing. There are many advantages for buyers to get pre-approved before beginning their home search. Pre-approval allows you to avoid looking at homes that are out of your price range so you can spend your time looking at homes that you can afford to buy. Sellers should not consider any offers that don’t include a pre-approval letter from a reputable lender or bank. The last thing you want to do when selling a house is to take your home off the market for an extended period of time only to find out the buyer is unable to secure financing.
Title Issues – The closing attorney will run a title search prior to closing to make sure there are no liens or assessments on the title. If the title is clear, the closing proceeds as planned, if not, the closing attorney will work with the seller to get it cleared. GAR (Georgia Association of Realtors) Form 20, which is the Purchase and Sale Agreement, states the seller will convey good and marketable title at closing. Good and marketable title being defined as, title which a title insurance company licensed to do business in Georgia will ensure at its regular rates. Its always a good idea to get title insurance to protect yourself from any liens popping up after closing that may not have shown up when they ran title before.
Once an offer has been accepted, all inspections have been completed, and the buyers financing has been secured, the next step is to prepare for the closing. Closing involves transferring ownership of a property from the seller to the buyer and normally lasts about an hour.
Before closing, the buyers should schedule a final walk-through of the property. This should be done the day before or the day of closing. This allows the buyer the chance to make sure all agreed upon repairs and any other any other negotiated items have been completed in a professional manner, as well as it gives them a chance to make sure the home is in the same condition as when they made the initial offer. If there are any problems revealed in the final walk-through, it can delay the closing, or the buyer may ask the seller for a specific amount of money to address the problems.