Only 74% of Homes Close Escrow on Time.
When real estate is bought and sold, in Portland or anywhere else, it doesn’t happen instantly. There’s a period of time known as the “closing”, and there are a number of things that need to happen in this 30-45 day (average) window.
According to a recent survey by the National Association of Realtors, 74% of sales ended up closing on time. The other 26% closed after the expected closing date. Delays can be costly for everyone. It is costly to maintain your current home while you’re waiting for it to sell or be purchased, both sides could be keeping household items in storage, or the buyer or seller could be living out of hotels. Then there’s the hassle of rescheduling movers and all of the other tasks that go along with changing residences.
Some reasons for closing delays are preventable, but a surprising number of real estate agents don’t see them coming. As a buyer or seller, it pays to be informed, so here are the Top 5 reasons for closing delays, and how to prevent them.
Top 5 Reasons for Closing Delays
- Mortgage issues. Trouble with obtaining financing is by far the most common reason for the closing date to be extended. The NAR survey found that this issue affects 38% of buyers. In fact, the buyer’s main job during the closing period is to keep their mortgage lender happy and supply them with all the information they need — from pay stubs and tax returns to home insurance quotes. It’s just the best way to prevent delays. Unfortunately there isn’t much the seller can do to ensure the buyer is providing paperwork in a timely manner. But the buyer’s agent can help keep tabs on the buyer for sure.
- Home appraises too low. The Portland real estate market is cooling off and therefore provides the occasional surprise low appraisal, especially as banks nervous about the housing market retaining its value. When an appraisal comes in low, it is important for the agents to jump in quickly, providing the appraisal company with comps, making a quick challenge to see if they can get it adjusted before the closing day arrives.
- Home inspection turns up issues. The home inspection is an important step in closing on a home, and most buyers will make their offer contingent on inspection. If the home inspector finds that repairs need to be made, the closing date might be pushed out to allow the sellers time to do the work. To avoid this potential delay, seller’s agents encourage the seller to offer the buyer a credit in lieu of repairs.
- Titling/deed issues. While the sellers are making repairs and the buyers are finalizing their loan, a title agent will be busy clearing the home’s title to be transferred to the new owner. They may turn up issues — for example, old liens or claims to ownership — that take extra time to be cleared up, which may occasionally result in a longer closing time. Sellers should be available and responsive to questions from the title agent, and be prepared to take steps to clear their title.
- Other contingencies stated in the contract. Contingencies are ways for buyers to back out of the offer if certain events or circumstances occur. These typically cover home inspection and title issues as well as financing, but a buyer may also make the contract contingent on the sale of their current home. Talk to your real estate agent and be sure you understand all the contingencies in the offer before you enter a contract with the buyer.
Some closing delays can’t be prevented, but having a knowledgable and experienced real estate agent on your side is the surest way to a smooth and timely closing. Don’t have agent representation? Check out our team’s credentials — we’re #1 in Portland for a reason!September 16, 2019