Closing on a property is one of the most awaited phases in real estate. However, the process is not confined to either 5 or so steps. Closings can be like an open-ended statement left with uncertain conditions that include but are not limited to delays and cancellations (worst comes to worst). And whether you are a buyer or a seller, you have to understand and prepare yourself for such circumstances.
But how come closings get delayed? Is such situation controllable? Since property closings are not merely about the buyer and the seller, involved parties have something to do with the process, too. As there is a myriad of reasons why closings get delayed or canceled, here are the 5 most common takeaways to help you keep the ground running.
1. Title Report Issues
One of the most common reasons why closings get delayed is due to some title-related problems that arise frequently. It is of much importance for both buyers and sellers to secure a "clean title" before closing as it can be extremely infuriating if both parties, particularly, the buyer (if in the future decided to sell the property) find out that there were previous liens on the property. Negligence of the issue will delay the closing since it will have to be resolved first before moving forward. Additionally, some other title-related issues including but are not limited to unknown liens, public records error, etc., can be ironed out but will take ample time prompting delays or worse cancellations. Therefore, both the buyer and the seller are encouraged to hire an attorney to help them run a smooth transaction. Sellers may advise their attorney to perform a title search to ensure a clean title regardless if the buyer gets declined for their mortgage or not, for this will secure a smooth sailing transaction in the future.
2. Mortgage Issues
There are instances that the mortgage company will ask the buyer to provide them a list of the required documents despite being pre-approved. At times, they will require additional documents a few weeks before the closing, especially if the buyer made a deposit at a current time to verify where did this money come from. Although reviewing the credit and bank statement of the buyer does not delay closing, the additional documents requested will, as they will have to go back to the underwriter to evaluate and clear to close again.
Additionally, there are instances that the buyer's mortgage gets rejected even after getting pre-approved because of some uncertain factors like additional debt records, change in income, etc. Therefore, to run a smooth closing, as much as possible maintain a good credit score, refrain from applying for other loans or another line of credit unless you successfully closed on the property.
3. Appraisal Issues
There are a few reasons why appraisal issues could be one of the factors affecting closings. It is extremely frustrating if there are repairs from the bank appraisal that are left unsettled. Therefore, for closing not to be held off, make sure that the appraisal has been completed with the accurate sales price reflecting the comparative market value with repairs completed prior to the closing date. Issues may include but are not limited to roofing, painting, electrical, broken/missing windows, etc.
4. Instrument Survey Issues
Apart from the title search, the attorney is also responsible for the instrument survey review. Doing such will obviate closing delays. Such examples of instrument issues include but are not limited to the property lines, neighbors' fencing being on the property boundary, etc. The property may be sold several times years ago, but it doesn't necessarily mean that it is no longer susceptible to potential instrument survey issues. To move forward, both parties must sign an affidavit acknowledging these issues with full cognizance and consent.
5. Disparities In Closing Figures and Last Minute Inspection Issues
Prior to closing, it is of extreme importance that both parties agree on the closing figures. Likewise, check them as the closing statement are not always accurate. Transparency and accuracy must come together as we are dealing with legal documents; negligence of the terms, particularly figures, will affect not just the closing but the legality of the transaction.
Additionally, despite getting all repairs done, during the final inspection, there are still some that are left unsolved. Hence, causing delays.
Conclusion
Finalization of the closing is contingent on certain factors like an appraisal, inspection, disparities on terms and figures, etc. It looks plain sailing, but the reality is, closings can be as complexed as they can be. There are tons of unexpected circumstances during the process; however, being clued in on the common reasons why closing on properties is hold up will save the day for you. If closings get delayed, or worse, canceled, you didn't just lose the property, but you most importantly miss the opportunity to enjoy the biggest win in your lifetime.
We have more updates prepared for you, don't miss them out by following us on our socials! And to know more about the closing process, please watch our latest video uploaded on our Youtube channel, "How Long Does It Take to Close on a Property". Also, don't forget to watch the video discussing this topic in detail "5 Most Common Reasons Why Closings Get Delayed or Canceled", I've shared concrete real estate scenarios during closing that I know will help you understand why, despite having a schedule, closings still get delayed or canceled.