The real estate sales process can be confusing for those without the abundant experience of a real estate attorney. There are a lot of terms that don’t come up in day-to-day life like escrow, lien, and easement. Documents of great importance seem to be required for every step along the way. Those entering the process might think it to be fairly straightforward—find a property you like, make an offer and get it accepted, then move in.However, that is not often the case. There are plenty of circumstances that can arise that add a few more steps to the process. And throughout this process, everyone has their eyes on the final step—closing.
This is when everything comes together and culminates in the transfer of ownership. It is the goal. But there are a lot of things that have to be aligned for a closing to be completed. Many of the steps leading to closing can add unforeseen headaches, but knowing about them beforehand can prepare you to navigate these challenges.
So, we’ve put together six common circumstances that might delay your closing process and escrow payments.
1. Insufficient Documents
Many first-time buyers are amazed when they sit down to complete the closing process and see a stack of documents as thick as a textbook. But these processes are important. They are complicated for good reason. These documents protect all parties involved—the buyer, the seller, and the lender.
And with an abundance of documents comes an increased chance of something being neglected. Many of these documents require verification and signatures from particular parties. Missing one of them could mean a chain of events is necessary in order to get the problem resolved. This can take time which may lead to a delay in the closing process.
2. Unrealistic Closing Dates
Not only does it take time to accumulate all the various closing documents, but additional delays may arise because of all of the necessary steps between an offer and closing. These steps include resolving such as the appraisal and inspection contingencies. Working through these contingencies can take time.
Thoroughness is required for these steps in order to protect all parties involved. Rushing anything can result in missed issues which can be a big problem for the buyer and the lender down the road. A knowledgeable real estate attorney will insist the inspectors have adequate time to perform their duties.
It’s important to have everything together when it comes time for closing, and not being prepared can lead to the closing date being pushed back. All parties are generally busy and it isn’t as simple as meeting when the documents and inspection are all in order—scheduling can be difficult.
The lender usually orders an appraisal after an offer is accepted. The value of the property as reflected by the appraisal can impact not only the taxes paid for the property over the following year, but also how much the house itself is worth. The value also matters to the bank because they are in the business of getting their money back. They don’t want to hand out a large loan for a property that doesn’t show much promise as security for the loan.
An appraisal that comes in far below the asking price for the property can become an issue. This issue can sometimes send the buyer and seller back into negotiations. And depending on what was found in the appraisal as well as the willingness of the parties to change the initial agreement, this process can take time.
4. Problems With the Title
Title issues can lead to significant delays in the closing process. Extensive delays can cause the transaction to fall through altogether. These issues can usually be cleared up with a little bit of work and advice from a real estate attorney, but it can take some time.
There are many possible problems a property owner can have with a title. It is essential to learn about these problems as early as possible to avoid delays. Possible issues include:
- Boundary disputes
- An unknown will
- Public records errors
5. Untimely Repairs
Inspections are another necessary contingency between an accepted offer and closing day. Inspections are performed so that the buyer is aware of any potential issues with the property. The inspection protects the buyer from being tasked with costly repairs that aren’t discovered until after the papers are signed and they move into the property.
Any issues found during the inspection can be negotiated with the seller. Oftentimes, many of these issues will be fixed before the buyer signs any papers. However, these repairs can take time if there is a long list of issues.
6. Final Walk Through
The buyer will make one final pass through the home before closing day. The buyer is are looking to make sure there aren’t any unresolved issues with the property. Any previously agreed upon repairs will be verified. The buyer will also be checking for any new damage since the last time they walked the property.
Any issues found during this walk-through can lead to delays in closing. These issues can include new damage, faulty repairs, or incomplete repairs. Any issues can lead to delays in escrow and closing.