“Are we there yet?” you ask like a 3-year-old on a long car trip throughout the closing process on your home.
Buckle up and relax, because these things take time.
OK, but how long does closing take?
Here goes: Ellie Mae, a software company that processes 35% of mortgage applications, reports the average time to close a purchase loan is 46 days (as of June 2020).
Deborah Smith, a Detroit area real estate agent who has sold over 65% more properties than the average agent, tells us anecdotally that it takes about 30-45 days to close a standard home sale in her area.
To be clear, it only takes 1 to 1.5 hours to sign all of the paperwork to close on a home, and sellers can often skip the closing table by signing their documents ahead of time.
But that’s only after at least a month of passing the ball—to the buyer, their mortgage lender, the escrow company, the title company, the home inspector, the appraiser—back and forth until you lock all the details in place.
A property stays on the market for 24 days on average, according to the National Association of Realtors Confidence Index as of this writing. So hypothetically, if you list your home on August 1 and accept an offer on August 24, you can expect to close your home sale somewhere between the end of September to mid October.
Yet any hiccup or even a slow response could throw you off your projected close date. With the help of top real estate agents who are master communicators and extraordinary negotiators during closing, we broke down the timeline of the closing process, so you can better predict your close date and keep the process moving quickly when the ball comes to you.
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The closing process—offer to closing table
The “closing” period of a home sale starts when you accept an offer on your home, and ends with the final signature. As you know by now, lots can happen in between those two big milestones.
You’ll get a firm idea of your closing timeline once you and the buyer sign the purchase and sale agreement.
See, signing the offer on your home confirms that both parties can agree on a price. The purchase and sale agreement details other points of negotiation, such as who gets to keep the fridge, the buyer’s inspection, how much the buyer will put down in earnest money—and (ding, ding, ding!) your closing date.
Each step from here on out will be scheduled based on that date, the final deadline on your home sale (which can be renegotiated in the event of delays or surprises).
Here’s a general overview of the steps to closing:
- Negotiate the offer and establish contingencies
- Open Escrow
- Review and clear the title
- Home inspection
- Necessary repairs
- Offer renegotiation
- Pay off hanging debt on the property
- Final walkthrough
If everything goes smoothly, you stand to close on your home sale in about 4 weeks. However, you should be aware of the common issues that delay closing going into it.
Rest easy knowing that a top real estate agent is there to handle any complications that come up to keep the deal moving forward without a hitch, but be prepared to do your part in communicating and making decisions that will impact the deal.
Common delays that drag out closing
According to the National Association of Realtors, 24% of closings get delayed but eventually go to settlement. Only 7% of contracts die before the deal closes.
Buyer financing issues are the no. 1 culprit for closing delays. Other top reasons for delays involve titling/deed issues, home inspection/environmental issues, and appraisal issues.
Buyer financing issues: the #1 hold-up in a home sale
If the buyer is holding up a sale due to financing issues, what can you do? According to Smith, not much. It’s up to the buyer to work with their lender to keep the sale moving forward.
“If the buyer commits to timely responses to a lender’s request, then the loan can close fairly quickly,” Smith says. “I’m usually in touch with the buyer’s lender so I’ll have a good idea when we’re moving forward.”
Handle title issues that could delay closing
Before you can close your home sale, you have to clear the title of any judgments, liens, or bankruptcies. Title issues are up to you to sort out––and could take months to settle. You may even want to think about hiring a real estate attorney to help you work out title issues.
Ask your real estate agent to order a preliminary title report before you put your house on the market. That way, if there are any issues that come up, you can take care of them ahead of time and save time during closing.
Be ready for home inspection setbacks
Within 7-10 days of opening escrow, the buyer will order a home inspection on the house. A home inspection will assess the home’s function and safety—and the buyer’s lender typically requires a home inspection to move forward with a mortgage loan.
The visual observation typically takes a few hours, and you’ll receive the written report within a few days. But the results of the home inspection could be the biggest hiccup in your home sale.
Most offers are contingent on the home inspection, meaning the buyers could walk away from the sale if the inspection turns up something they don’t want to deal with and you aren’t willing to remedy.
These major issues could severely affect the outcome of your home sale:
- Structural Issues
- Water Damage
- Electrical Issues
- Roof damage
- Plumbing related problems
- Insect or pest infestation
If a home inspector finds a major issue in your home, the buyer will either back out of the sale, request that you fix it before closing, or renegotiate a lower offer.
With minor issues, such as a broken window pane or a loose roof shingle, the buyer will typically request that you repair it or request a credit to fix the issue once they own the house.
If the buyer requests repairs, you’ll have to hire someone to fix the issues as soon as possible to keep the closing process on track.
You could also order a pre-inspection before you list your home on the market. A pre-inspection reveals the same issues as a buyer’s inspection and gives you time to repair issues before you receive any offers.
This could save time during closing, but you have to disclose everything in the pre-inspection report to buyers and pay for the pre-inspection with your own money.
How the home appraisal can prolong closing
The home appraisal comes down a few different ways: the appraiser values your home under the buyer’s offer, close to the offer, or over the offer.
A home appraisal can prolong your sale if the appraiser values the home lower than the buyer’s offer. Either the buyer and seller will have to negotiate to make up the difference, or request a second appraisal for the deal to move forward.
Those negotiations could add a few hours to the closing process—or a few weeks. It all depends on if (and when) you and the buyer are able to come to an agreement.
3 tips to keep your closing on track
With all the moving parts of closing a home sale, every person has to do their part to get to closing day. Although there’s not much you can do to hurry the buyer along, you can stay on top of your tasks to get to closing day faster.
Here are 3 tips to remember to keep your home sale on track.
- From the start, make sure buyers are pre-approved for a mortgage.
This will cut down the time to close on their home loan, which is the biggest delay in the closing process.
- Jump on requests ASAP.
If the buyer requests repairs after the home inspection, hire someone to fix the problem immediately. Or if your real estate agent asks for a specific document or receipt, get it to them as fast as you can.
- Be decisive and communicative.
During the closing process, you might come to several forks in the road when you’ll have to decide whether to make concessions, stand your ground, or meet your buyers somewhere in the middle. The longer you linger on these negotiations, the longer it will take to close the deal.
Closing day: How long is the final step?
So you’ve made it over every hurdle to the closing table. Now, you can finally start to breathe. If you complete all the required steps and tasks and the necessary funds end up in escrow, closing day should be short and sweet.
“Typically, the closing takes an hour to an hour and a half,” says Smith. “Most of the most important documents are the deed, the bill of sale, and the closing disclosure. The rest are usually different disclosure documents required by the title company, which varies by state.”
You may or may not be required to attend the closing, depending on your state laws. Ask your real estate agent if you can sign the documents ahead of time or if you need to be present for closing.
At the end of the day, you can get through closing quickly if you are prepared throughout the home sale and work with a top real estate agent who keeps things moving along.
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