When it comes to selling, buying or closing on a home, one of the major questions that cause headaches is “How long does it take to close on a house?”. Recent US real estate statistics have highlighted that the average householder spends around four months house hunting, looking at approximately twenty properties before closing a deal. The actual time it takes to close on a house is generally around six to eight weeks if financing. Naturally, as part of the closing process, it’s absolutely essential to find the best mortgage terms as well as an attorney who will assist with any legal issues concerning buying a home.
Selling a home, buying a home or closing on a home involves many factors that can depend significantly on the location. To reduce the timescale, buyers, and sellers of real estate in will benefit from the following:
- Knowing exactly what they want in a house
- Working out how much they can afford
- Asking a realistic price for a property
- Choosing a recommended real estate agent
- Acquiring a suitable mortgage lender
- Hiring an attorney who is dedicated to finalizing the closing process as quickly as possible
Do Some Homework
To get an approximation of the closing process, do some homework and shop around for a professional realtor. Ask friends, neighbors and work colleagues as well as financial advisers for positive referrals to attorneys. It’s worth remembering that financial closing costs are paid by both the buyer and seller. In some cases, the seller has to pay for certain expenses while the buyer pays for others.
To minimize closing expenses, a reputable realtor can help negotiate buying or selling costs on their clients’ behalf. However, it’s worth pointing out that some fees are set by US law and cannot be negotiated, so do bear this in mind when thinking about the ins and outs of the closing process.
What Could delay the closing process of buying or selling a property?
Unfortunately, there are numerous reasons that could affect and delay the closing process of buying or selling a home. A buyer or a seller of a property cannot be absolutely sure a deal is done until the “t’s” are crossed and the “I’s” dotted. The term escrow is the 30 days between a purchase on a property being accepted and the keys handed over. During this time there may be many hurdles to overcome for both the buyer and the seller which could cause delays putting them back to square one.
Here are some of the most common problems that buyers or sellers could encounter through this period and what can be done if possible to prevent them.
- Termite or Pest Inspection
The vast majority of mortgage lenders in the US insist on having a pest inspection carried out on the property to make sure there is no serious damage. Insects, termites, and carpenter ants can quickly eat through wood leaving it infested and unstable. The cost of pest inspections to the property buyer is usually around $100 or less.
This will protect the lender’s interest in the property so if pests are detected, the deal could fall through. It’s also in the best interests of the buyer to have a termite inspection carried out. After all, buying a property, however, large or small, is a major investment. If the problems are deemed to be too severe and the seller won’t pay to remedy them, then the buyer has the option to walk away as long as the purchase agreement has the correct contingencies.
- An Appraisal
A lender will have a property appraised in order to protect their investment. The Mortgage Institution in Florida will want to make sure the home is worth at least what the buyer is paying for it so losses can be recouped if anything untoward happens. The rule of thumb is if an appraisal comes in too low, the seller will have to reduce the asking price or the buyer will have to pay cash for the difference. When this situation arises to get a more favorable second opinion from a different appraiser and realtor.
- Getting Cold Feet or the Seller backs out
An established Realtor® will make sure there is a contract in place outlining justifiable reasons for the buyer or seller backing out of the deal without a penalty. This could include not waiving a contingency or not meeting a deadline. If the buyer decides after waiving the contingency that they don’t want to go through with the purchase, maybe because they have found a better property, the earnest money will be lost. This will compensate the seller for the time their home was off the market.
Alternatively, if the seller decides to back out because he or she has a change of heart or a better offer was made for the property, the buyer has the legal right to collect damages from the seller.
- Be sure to get approved for Finance
Real estate experts have highlighted that one of the main reasons for property deals falling through is that buyers do not get Pre-approved for finance. Making an offer for a property without getting financial Pre-approval can be a major mistake. It’s surprising how many buyers do not acquire a written loan commitment from a bank or a mortgage lender before submitting an offer.
In the same vein, property sellers should not accept offers from potential buyers who have not been approved for finance from the relevant sources. This can lead to the closing process being at risk especially if the buyer has lied on their loans application form. If interest rates increase sharply, a buyer loses their job or their credit score goes down their property offer could be in jeopardy.
- A Home Isn’t Insurable
If the seller has made a major insurance claim in the past on their property such as water damage or mold, this should show up on insurance records. Some insurance companies may refuse to insure a property if it is too much of a risk.
At the end of the day, if a home is not insurable a buyer won’t be able to make an offer unless they are paying cash. Let’s face it, it’s not a good idea to buy an uninsurable home so seek the advice of an experienced realtor if any problems like this come to light.
The Closing Process
Once an offer on a home has been accepted, the inspections are complete and finance is in order, the next move to focus on is the closing process. Professional realtors can prepare buyers and sellers regarding what to expect throughout closing. Settlement day involves the formal and legal requirements of transferring ownership of a property from the seller to the buyer. Regulations can vary from one state to another, however, the following two aspects are usually the same.
- A contract should allow the buyer to schedule a walk-through of the property 24 hours before closing. This is intended to ensure that the seller has completely vacated the property and the home is in the condition which has been described in the contract. Any outstanding repairs should have been completed and everything is in place for new occupancy. If the walk-through does reveal any problems, it can delay the closing process or the buyer can ask the seller for money to address the issues.
- The buyer has the right to receive an HUD-1 settlement statement for review twenty-four hours before closing. The HUD-1 settlement statement can then be compared to the good faith estimate a lender has provided. There should be no discrepancies between documents.