Top Reasons For Closing Delays

Reasons For Closing Delays Abound

Mortgage lenders require more documentation than a decade ago.  Contracts tend to move faster to impress Sellers – but maybe too fast.  Contractors are busy and repairs take longer.  This blog by Realtor Bob Gordon takes a look at some of the more common reasons for closing delays.

It’s Not An All Cash Offer

Truth be told, nearly 70% of offers in our marketplace are not cash.  You are twice as likely to have a mortgage involved these days.   And during the hot season, mortgage lenders can be even busier than usual.  So no surprise here: one of the biggest explanations for delays in closings today is loan processing times take longer than expected.  This generally isn’t an intentional or malicious situation.

Quite simply, everyone in the process can find themselves a little behind.  The buyer takes a little longer to get the necessary paperwork into the processor.  The loan doesn’t go to the underwriter until the appraisal is completed.  The appraiser is waiting on the inspection resolution.  A day here, two there, its easy for closing delays to occur. 

Again, best advice to buyers:  Get paperwork turned in quickly  Sellers: we all want to get deadlines checked off quickly, but be sure to also give your buyer a reasonable amount of time to get their mortgage completed.

Clearing Contingencies

We live in this hot real estate market, but sometimes, even in the best of times, a home doesn’t close on time.  If your transaction is dependent upon another house selling and closing, and that sale doesn’t complete, be ready for closing delays. 

Review Your Title Paperwork

Title insurance paperwork is some rather dry stuff.  It is the responsibility of the home buyer and home seller to read their title policy.   Defects in title can be time consuming and lead to reasons for closing delays.  Just reviewing the policy in a timely manner can help all parties get to work quickly to minimize any delay.

Missing paperwork is one of the most easily avoidable reasons for closing delays

Missing Paperwork

Maybe not as avoidable as it used to be: missing paperwork.  These days, it can feel as though the mortgage lender requests a boatload of documentation.  And then as the closing date arrives is asking for updated this or that.  Or suddenly needs another year of tax returns.  Or thought the buyer submitted all the paperwork but is noticing a key document is missing.  

This is probably the top reason for closing delays these days.  Sorry lender friends.  It seems like more than ever buyers are delayed over paperwork.

Home buyers; respond quickly when your mortgage lender asks for documentation.  Request for an underwriter to review your file early in the process. 

Hiding Serious Issues

Sounds straight forward. Be honest, don’t lie.  One the worst reasons for a closing Fail or Delay is deceit.  Sellers, don’t hide damage to your house such as mold, water damage or structural issues.  Use the Seller’s Property Disclosure to get in front of issues.  Buyers, be certain to give your lender all the information needed up front to get your loan approved. 

Nothing worse than getting weeks into a transaction and discovering reasons for closing delays that should have been disclosed before you ever got under contract!

Low Appraisal Causes Delays

Its none too uncommon to see some sort of appraisal coverage in an offer these days.  But still, there can be low appraisals and then really Low Appraisals.  When the financing is contingent upon the house being correctly valued by a 3rd party (bank, lender), be prepared for delays to your closing if the appraisal comes in low. 

Sometimes, this can be overcome with a new appraisal.  Or buyer and seller may need to renegotiate the terms.

Incomplete Home Repairs

Consider a concession in lieu of repair.  This is one of the most easily avoidable reasons for closing delays.  The home buyer and seller negotiate during the Boulder Home Inspection phase of the contract to have a problem corrected. And then that repair winds up taking longer than anyone bargained for it to take. 

And the closing gets delayed.  Doesn’t sound like a big deal, but these days, with ever increasing mortgage rates, a small delay can impact the mortgage lock and a delay can unravel a deal or at the least cause some sleepless nights.

Leave Credit Cards Alone

Whether your first home or dream home, remember the loan qualification process looks at your ability to perform.   Don’t mess with credit cards while under contract. Hold off on furniture purchases and big ticket items like a new car until after you close.  One the most easily avoidable reasons for closing delays is racking up debt.   So don’t do it!

Boulder Real Estate News Recommends

Luke Scar out of Madison, Wisconsin, put together a sharp blog on the 13 Mistakes 1st time home buyers frequently make.  Check it out and avoid these issues for a solid home closing. 

Maria Mastrolonardo, with Re/Max of Naperville blogs on Common Home Seller Mistakes.  Avoidable issues that are sure to bog down a closing.  Fun fact: Naperville is also home to my cousin Steve.  He has a solid law practice if you ever need a bit of legal advice.

Moving is stressful.  So be sure to get everything in writing.  This plus more great tips from me, Realtor Bob Gordon in my blog about moving mistakes to avoid!

Paul Sian, a Realtor working along the Ohio/Kentucky border reminds me how important the buyer’s final walk through is to the sales process.  I’ve heard more than a few horror stories of issues discovered at a walk through. Better to merely delay a closing than have a client call horrified post closing with an issue.

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