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It's important for home buyers and home sellers to be fully prepared for potential delays in a real estate closing. With so many parties involved in a successful real estate transaction, it's understandable how delays can occur. Here are some of the more common reasons why real estate escrows and closings can be delayed:
Unrealistic Contract Dates
One of the primary reasons for a delayed real estate closing is unrealistic contract dates. Ideally, a contract should allow between 45 and 60 days for closing to occur after a purchase offer has been accepted.
Problematic Appraisals
When the buyer submits a mortgage application, the buyer's bank will want to complete an appraisal to verify the property's value to determine whether the property is suitable to the lender as collateral security for the loan. Problems arise when the home is appraised at a lower value than the purchase price and the buyer and seller can't reach an agreement on new terms for the transaction. It's also problematic if the appraisal reveals damage, which the seller will need to repair prior to the closing date.
Additional Lender Requirements
Even if a buyer has received a mortgage pre-approval from a lender, there are times when the lender may delay the closing process. For example, the buyer may have been easily able to afford repayments and to come up with the required down payment at the time of the initial application; however, if the buyer has spent the down payment or their financial situation has dramatically changed as the closing date draws near, the lender may require additional verification so that the mortgage is able to proceed.
Incomplete Property Repairs
If the appraisal revealed property damage, the buyer can request that the seller complete the repairs before closing date or ask for some form of seller concession on the purchase price in lieu of repairs. As long as the repair work is satisfactory, the closing can proceed without any issues; however, closing can be delayed if the seller doesn't fully comply with the agreement.
Unsatisfactory Final Walk-through
The final walk through is the buyer's last opportunity to check that everything is functioning properly, including the furnace, air-conditioning, toilets, and utilities. If the seller has agreed to make repairs and the buyer finds that the repairs were not done properly, then the closing will be delayed until everything is satisfactory.
There are plenty of other issues that could potentially delay a real estate closing. Understanding more about some of the more common reasons that real estate closings can be delayed makes these problems easier to avoid.
