Home closing delays are a reality. And, they are much more common than most people believe. Even if you’ve been through the home purchase process before without a hitch, it’s very possible this time will indeed be different. For example, did you know, on average, one out of ten of every residential real estate transactions don’t reach conclusion. And, in a hot market, like the one here in Orlando, that figure rises. Which means you should be aware of the most common home closing delays.
What You should Know about Home Closings
Residential real estate settlements or closings, are an everyday occurance. However, to spite their ubiquity, there remains a lot of mystery about them. It’s important to note, there’s a lot that’s done between the time you submit a purchase offer and its acceptance to closing day. There is an earnest money deposit, inspections, an appraisal, a title search, final or soft credit check, and more due diligence conducted. With each of these events comes the real possibility of delay.
“Many mortgage lenders require borrowers to meet certain guidelines. For example, VA loans are only available to eligible veterans, while qualifying mortgages have their own list of restrictions. Your lender will be able to tell you which loans you qualify for.” —Realtor.com
For instance, one or more inspection could uncover one or more problems with the home. or, the appraisal comes in lower than the agreed purchase price. (That scenario means you’ll either have get the seller to agree to drop the sales price or come up with the difference.) Another possibility is for the second or soft credit check to reveal something that delays or denies your financing. In other words, there are a lot of moving parts and each must work properly for the transaction to go through successfully.
Top Home Closing Delays You should Know About
Although the majority of residential real estate deals do eventually go through to completion, there are plenty of things which can put them off longer and longer. Here are the top home closing delays you should know about:
- The home is uninsurable. Since we live in a subtropical climate, if there’s a tropical system coming to the area, you won’t get the insurance coverage you need to satisfy the lender. Or, the seller might have previously filed a claim. These two and more scenarios can be very problematic as an insurance claim search will also be conducted to underwrite the property.
- Clouds are found in the title search. Title defects are unfortunately more common than you probably think. These arise from lawsuits, unpaid homeowners association fees, unpaid property taxes, and other scenarios.
- The appraisal comes in too low. This is something that’s most problematic because it totally undermines the agreed selling price. After all, both the buyer and seller think the price is right and in-line with the market. However, the appraiser thinks differently. Of course, the bank won’t magically increase the financing. Which means you must make up the difference, get the seller to lower the price, or walk away. One remedy is to order another independent appraisal to support the agreed selling price.
- The mortgage financing is denied. Just prior to closing, the lender will run what’s called a “soft” credit check. It’s to ensure the borrower has not opened new lines of credit, or maxed out existing accounts.
- An inspection uncovers one or more problems. The pest, wind mitigation, or home inspection can all be a big blessing, protecting the buyer’s from lemons. But, they can also derail sales just as easily.
If you’re going to sell your home in the near future and buy a new house, please don’t hesitate to phone me at 407-616-7286, I’ll be happy to speak with you.