Will my closing take place on time?

You’re psyched to either buy or sell a home and you enter into a contract to purchase.  You get through the negotiation and settle on the details.  Finally it’s time to move forward with all the steps to closing.  The closing date is defined in the purchase contract.  You’re excited, you make plans for that date.  Then you look at your agent and say…will my closing take place on time?  (Don, don, don)  The short answer is…Probably not.

What?  What do you mean probably not?? Well, the truth is the ENTIRE process of purchasing a home is so much different today than it was just a short 5 years ago.  The most dramatic change is of course with the lending process.  However, even cash sales are having trouble closing on time lately.

When I started in real estate in late 1996, the purchase contract was legal size paper front and back.  Yep, just 2 measly little pages.  Today the purchase contract is 10 pages long!  That doesn’t even include any addenda or the required Residential Property Disclosure.  It’s a litigious society out there and the basic contracts are the proof!

While the current North Carolina Offer to Purchase and Contract does have a spot for a specific closing date, there is also a provision that extends that date by 14 days provided that all parties are moving forward with their best efforts and the delay is being caused by no fault of their own.  Frankly, most delays truly are no fault of the parties, but rather the outside vendors…namely the lender.

For the first time in 18 months, I had a transaction actually close on time last week.  It was a cash transaction and there were 50 days to make it happen. Keep in mind, most offers are written with a 30 to 45 day due diligence period and then another 10 to 15 days to closing.  That’s a 60 day time frame to get it all done and even still most contracts are exercising the 14 day auto extension to make things happen.

Below is a list of the most common issues that come up causing potential delays in closing.

  • Negotiation of the home inspection items takes longer than usual.  Most buyers won’t move forward on any other diligence (appraisal, survey, etc) until this part of the process is complete to save the unnecessary expense if an agreement can’t be made.
  • 7 days before closing the buyer decides to open a new credit card account at a store to take advantage of the 10% off, or some other new credit is opened at the last minute…this means underwriting to stop and ask questions, generally causing a 2 to 3 day delay.
  • Appraisers are very backed up and some appraisals will take 2 to 3 weeks to complete.  Now, even the lender has very little if any control as to who is even chosen for the work.  Leaving the entire transaction at the mercy of the appraisers schedule.
  • Employment has to be verified, then re-verified, then triple verified!  Hope the entire HR department doesn’t get the flu!
  • Doing a Jumbo loan?  The amount of paperwork required is maddening.  Be prepared to account for EVERY SINGLE penny you have.  Not kidding!  Last minute bonuses from work will cause the underwriter to stop and ask questions.
  • Buying a condo?  Be prepared for a minimum of 25% down or else a full review has to be done on the condo project.  This will easily take a week, just for that process.  Nothing else can be done until that’s complete.

Each of these are examples of actual circumstances that caused delays for many transactions over the last few months.  The job of the real estate agent has changed over the years.  We spend 85% of our time actually getting the deal closed.  Make no mistake…having a good agent on your side WILL help your closing successfully take place.  The days of easily being able to sell by owner are most definitely behind us.

I don’t say this lightly…yes, it is good job security.  At the same time it is also a lot more risky.  Everything truly has changed.  Agents are finding that we are spending tremendously more time engaged in the closing process due to the increased liability, increased regulations, increased buyer demands and decrease of flexibility sellers can afford.