How Long Should Your Close Be?
Your offer is almost accepted. Now you and your Realtor® are working with the seller and their Realtor® on the terms of the close. How long should it be?
What is a “close?”
When people talk about the close of a home sale, they are referring to the close of escrow when all the terms of the purchase contract have been met, the seller deposits the deed, and the buyer deposits the funds. Some conditions (and yours will vary based upon your location…even in the same state) you will probably need to meet (from About.com Home Buying/Selling)
- Fully executed purchase agreement and addendums.
- Deposit of earnest money deposit.
- Home inspection or waiver.
- Fulfillment of seller obligations such as submission of pest inspection report and / or completion, roof certification, home warranty, preliminary title policy, beneficiary demand receipt, repairs, if any, according to the Request for Repairs.
- Completion of buyer inspections, including release of contingencies, if demanded.
- Buyer’s final walk-through inspection or waiver.
- Appraisal of property by lender’s appraiser.
- Lender’s loan approval and satisfaction of loan conditions by buyer such as depositing evidence of a homeowner insurance policy.
- Seller’s and Buyer’s signed escrow instructions.
- Seller’s signed and notarized deed conveying title.
- Buyer’s signed and notarized deed of trust and executed promissory note.
- Buyer’s signatures on all loan documents.
- Deposit of buyer’s funds from lender.
- Deposit of balance of buyer’s down payment and buyer’s closing costs.
Seller Usually Goes First
Usually, the seller will request a close that is best for them. It could be long if they need to find another house, or if they want their children to finish out a school term. Or it could be short because they’ve already moved and want their cash.
One buyer had a set date in the offer for a birthday as the final close. The seller countered with a sooner date that happened to be his birthday.
Brand New Homes
But what if you’re purchasing a brand new house? You should work closely with the builders as to their schedule. If you want to move in sooner, they might have the flexibility to adjust the schedule of which houses they complete when.
Additionally, do your research and find out if the builder is known for completing on time. If they aren’t, you may want to put in a clause where they pay for your rent for each full month past the agreed upon date.
You will also need to have enough time for appraisers and inspectors. If they’re busy, it could delay your final settlement.
Buyers with pre-approval will be able to close much sooner than buyers who are not. If many people are going for mortgages at the same time, it may not only delay you locking in an optimal rate, but it could also delay your taking possession of the house. The underwriters will need to process the paperwork and review the appraisal, and this can sometimes take a week or two. If a document is missing from the file such as a title clearance, it could delay the close.
Other things that can go wrong (also from About.com Home buying/selling)
- Low appraisal or the underwriter orders a review appraisal that does not match the first appraisal.
- Additional debt found on the buyer’s updated credit report.
- Mistakes noted in the buyer’s credit report.
- New liens or judgments filed against the buyer or seller upon title update.
- Clouds on title.
- Marital status change for buyer or seller.
- Required updated bank statements or financial documents.
- Insurance information missing.
- Expired loan or program commitment.
Bottom line is that pre-approval will help. And work with your Realtor® as to when the close of escrow is best for you, and how flexible you can be.