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Congrats, you’ve signed your purchase contract! While it may feel like the home buying/selling process has come to an end, let’s not forget about the closing process. So exactly how long does it take to close on a house? Here’s an overview of what happens during closing and the delays that could derail your timeline.
What happens during the closing process?
Once a home is under contract, there are a few more things that need to be taken care of before the sale is official. Let’s go over some steps you’ll take leading up to your closing day:
First, the buyer will schedule a home inspection to get a better idea of the home’s condition. If the inspection flags any issues, the buyer and seller will negotiate the necessary repairs. The buyer may request that the seller makes these repairs themselves or that they cover some of the buyer’s closing costs to cover the cost (this is called a “seller concession” or “a credit toward closing costs.”)
At the same time, the buyer will be completing their mortgage financing. That includes completing loan application paperwork to their lender and getting homeowners’ insurance. Their loan officer will also schedule a property appraisal to make sure that its value is equal to or greater than your purchase price.
The title company will handle the task of transferring ownership of the house, which includes setting up a title search and issuing title insurance. The title company will also work with your real estate agent to figure out the logistics of your closing day. Right before closing, the buyer will do a final walk-through of the home to review any requested repairs and make sure the house is in good condition to close.
On your official closing date, the buyer and seller will finalize the transaction. Depending on where you live, either an escrow officer, title agent, or real estate lawyer will guide the closing day process. You’ll sign the paperwork needed to transfer ownership, which includes the seller handing over the deed and the buyer depositing the funds. And that seals the deal!
What can slow down a closing?
As you can see, there are a ton of moving parts during this period. Unsurprisingly, there are also many issues that could pop up along the way and cause closing delays. Here are some of the most likely culprits:
- Financing issues: This is the most common hurdle. For mortgages, the underwriting process is pretty extensive. For example, if the lender sees a recent inquiry on the buyer’s credit report, they may re-assess the loan terms or require additional documentation, which may affect when the loan will close.
- Low appraisal: A buyer’s mortgage lender will not lend them more than the home’s appraised value. If this ends up happening, the buyer will either have to renegotiate the purchase price with the seller, pay the remaining balance out of pocket, or walk away from the sale if they have a contingency.
- Inspection flags: The home inspection will flag issues in the house that need repairs, kicking off another round of time-consuming negotiations between the buyer and seller. The seller can make the repairs themselves, give a concession, or the buyer could walk away from the sale if they have a contingency.
- Home sale contingency: This contingency lets existing homeowners make an offer on a new home that is contingent on selling their old home. If the purchase contract includes this condition, you’ll need to wait for the buyer to sell their existing home before you can reach your closing day.
- Title problems: In some cases, the title company may find liens, unpaid taxes, or other restrictions that could potentially affect ownership of the home. Clearing the title can be time-consuming, especially since it can involve jumping through legal hoops.
How to speed up a closing
Closing times can vary depending on market conditions. The closing preparation period alone can take an average time of 50 days to complete, and these times are getting longer. That number can be pretty scary, especially since time to close is vital for both the buyer and seller. Here are some tips to help you wrap up your home closing faster:
- For buyers, get pre-approved by your lender before making an offer to help speed up the application process. This step will require preparing your financial documents beforehand. Also be decisive and communicative, especially during negotiations. Otherwise, the back and forth between you and the seller can take up a lot of your time.
- For sellers, ordering a preliminary title report before listing your house could prevent surprises down the road. Also, consider speeding up the closing process by selling your home with Orchard: you’ll receive a fair, market-price cash offer that isn’t contingent on another sale, a loan, or anything else. We’ll also purchase your house in its current condition with no prep work required. That means you don’t have to spend time making repairs before selling. You also can move out on your schedule, so you can line up your closing dates and avoid potential delays.
Orchard can also streamline the closing process if you’re buying a new home and selling your current one at the same time. We’ll help you make a strong, non-contingent offer to buy your next home, then sell your current home for top dollar in 120 days or less. That way, you eliminate the stress of lining up your buying and selling timelines so you can focus on finding your dream home.
Talk to an Orchard Home Advisor to learn what the closing is like in your area and what you can expect when working with Orchard.