While no one wants to wait longer than they need to for a real estate transaction to be completed, 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 five of the most common problems that lead to delayed closings, and some tips on managing them.
Things could go wrong when that second verification reveals a new credit line that’s been opened (for a new car, new house stuff, etc), a change in employment, or some other issues. Remember that even the smallest changes in your financial situation can create problems up to the moment you close on the property. So changing jobs, applying for a new credit card, falling behind in paying your debts, receiving a cash gift, or having a sudden large deposit in your bank account are not advisable since the lender may request additional information or documentation, which could throw a wrench into the process.
To avoid this: Don’t make any sudden financial moves in the weeks between loan approval and closing. Also, don’t forget to contact your lender days before closing to discuss and solve any issues that may have turned up.
Appraisal gaps, which is the difference between the appraised value of a home and the agreed-upon price, have recently become much more common because of soaring home prices. While this doesn’t necessarily mean that the deal is off, addressing it can take time. In fact, according to the REALTORS® Confidence Index Survey by the National Association of REALTORS® in February 2024, seven percent of contracts had delayed settlement due to appraisal issues.
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.
According to Bankrate, a title search is a process in which a title company or attorney examines public records to make sure that there are no claims, liens, or issues with a property that could result in another person or entity asserting they have a stake in the home. Issues such as tax liens or claims on the property from a relative or co-owner can postpone a real estate closing. Even unpaid HOA dues and minor errors in the home’s public records can cause significant confusion, putting a transaction on hold until everything is sorted out.
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.
While some financial institutions and title companies prefer cashier’s or certified checks, 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 about what their wiring requirements are.
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.
Surprises can arise during the final walkthrough that can influence the real estate transaction. Here are just a few of them:
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.
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.
