Whether you're buying or selling a home, the real estate closing is likely to be both exciting and unnerving. While both parties have agreed on a chosen closing date and dollar amount, there are still plenty of surprises that can be tricky to deal with and cause hiccups in the process. Early 2024 data from the REALTORS® Confidence Index Survey by the National Association of REALTORS® (NAR), 11% of contracts in a three month timeframe encountered delays, while 6% were terminated.
No one wants to wait longer than they need to for a real estate transaction to be completed. However, you may find your closing date delayed for several reasons. Some issues are relatively easy to solve, while others can be deal-breakers. Here are some of the most common problems that lead to delayed closings, and some tips on managing them.
1. Buyer's financing
Delayed or denied financing is a common cause of prolonged closing. Many home buyers don't realize that even though they were pre-approved for a mortgage months before, and they already have a mortgage commitment, the loan is still not guaranteed. The lender still needs to review credit and bank statements one final time within a few days of closing. Things could go wrong when that second verification reveals a new credit line that’s been opened (for a new car, house stuff, etc), a change in employment, etc. Even the smallest changes in your financial situation can create problems up to the moment you close on the property.
To avoid this: Do not change jobs, apply for a new credit card, buy a car, or experience a sudden significant change in your bank account. Lenders will see these things and may request additional information or documentation, which could throw a wrench into the process. Don’t make any sudden financial moves in the weeks between loan approval and closing.
2. Discrepancy in appraisal value
To avoid this: With the consensus of both parties, the seller can complete necessary repairs to increase the home’s value, or simply bring down their selling price. Buyers should also be prepared to pay the difference if the appraisal is too low. The parties could also contest the appraisal. Whichever the eventual solution, the closing date will likely move further into the future.
3. Issues with real estate title
To avoid this: A seller may be able to get ahead of title problems by having a real estate attorney track the home’s title history. But since problems with a real estate title can be the result of past mistakes, there’s not much a buyer can do to avoid them. They will definitely need some time to resolve, so a little flexibility and patience can go a long way. It may be frustrating, but it’s better to be safe than sorry before claiming your way into homeownership.
4. Issues with the money transfer
On the day of closing, you'll have to prepare the correct amount of funds to cover your down payment and closing costs. If there’s a problem with your fund transfer you can expect to experience delays. Some financial institutions and title companies prefer cashier’s or certified checks, while others require funds to be transferred electronically. If you’re instructed to wire funds, it’s critical to talk to your settlement agent or attorney to know the specific requirements.
To avoid this: Before closing day, make sure to communicate with your real estate agent and lender about what form of payment is required. Also, be informed and know exactly what’s expected from you in the closing costs and certified funds. Don’t forget to have your checkbook with you and be ready to pay for small items that might crop up, such as an unpaid electric bill.
5. Surprises during the final walkthrough
The final walkthrough is typically completed after the seller has moved out, a few days before, or even on the day of settlement. It allows buyers to do one last check on the property, making sure that the home they're purchasing is in the same condition it was when they agreed to buy it. Surprises can arise during the final walkthrough that can influence the real estate transaction. Here are just a few of them:
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Missing fixtures - Misunderstandings about which items stay and which go with the seller is a common issue. Perhaps you’ve taken a liking to a particular household item and assumed it would stay, only to find out that the sellers took it with them. Unless you’re really attached to the item, you may want to let this one slide if you want this deal to go through.
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Unfinished repairs - If the seller “forgets” to fix any agreed-upon repairs or simply neglects to do them by the closing date, you might not be able to close on your loan until those repairs are complete. If you’re working with a trusted real estate agent, they’ll ensure that the repairs you’ve negotiated are completed well before the closing is scheduled to prevent delays.
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Other last-minute revelations - Double-check if the appliances are working properly; that the utilities and other home systems are functioning, and even see to it that the toilets are working!
To avoid this: Good communication is essential in solving any of the problems that arise during the final walkthrough. Be very detailed in your contract about what stays and what goes, and make sure it reflects your expectations. The same can be said about agreed-upon repairs after the home inspection. The safety and soundness of the property are of utmost priority, so ensuring that the seller either completes the necessary repairs, settles on a lower sales price, or even makes some other concession, will prevent the date of the closing from being pushed back.
