Buying a home is an exciting process, but when your closing date gets delayed…a single phone call can quickly ramp stress levels up from 0 to 50.
Best case, a delayed closing is a minor inconvenience. Worst case, you planned to move in that day and are now stranded with dogs, kids, moving vans and no house to put them all in.
Unfortunately, closing delays are very common, but understanding the reasons behind these delays can help you prepare for and navigate the challenges if the worst does happen to you.
Here are some of the top reasons a home closing might get delayed:
1. Issues with Financing
One of the most common reasons for a delay is last-minute financing issues.
Your lender will conduct a thorough review of your finances, credit score, employment history, and debt-to-income ratio before giving final approval. Any red flags, like a change in employment or a significant financial transaction, can cause delays.
There are multiple people involved behind the scenes working to get your loan and documents prepared – loan officer, loan processor, underwriter, appraiser, title company – just to name a few. Because so many parties are involved, minor details can often take awhile to get sorted through.
2. Title Problems
Title issues, such as unpaid property taxes, outstanding liens, or boundary disputes, can also hold up a closing. These need to be cleared before the transaction can proceed, which might involve additional paperwork, research, or legal work to ensure a “clean” title.
3. Appraisal Challenges
Your lender will require an appraisal to ensure the home’s value matches the loan amount.
If the appraisal comes back lower than expected, there are a few options. You and the seller can negotiate a mutually acceptable price, which could include lowering the sale’s price, requesting repairs, or offering concessions.
If it is a VA Home Loan, you can also take advantage of the Tidewater Initiative and Reconsideration of Value to try and challenge the appraisal.
If all else fails, you can use the VA escape clause to walk away.
4. Home Inspection Issues
Home inspections sometimes reveal repairs or issues that need to be addressed before the sale. If significant repairs are required, it may lead to further negotiations with you and the seller, especially if contractors are needed to resolve these issues before the sale can proceed.
5. Document and Scheduling Delays
With so many people involved—lenders, real estate agents, inspectors, attorneys, and title companies—scheduling conflicts and delayed documentation may occur. Errors on closing documents or last-minute changes can also slow down the process, as every document must be checked and signed before closing.
That is why it is important to submit all of your documents early in the process!
How to Avoid Closing Delays
While one party can’t control every aspect of the process (even though we wish we could!) being proactive and having open communication with everyone involved can help.
For buyers, it’s crucial to avoid any significant financial changes such as purchasing a car or opening a new credit card. Make sure you stay in close contact with your lender, and be prepared for potential inspection or appraisal negotiations.
Sellers can help by ensuring the property is ready for inspection and by being responsive to requests. Working with an experienced WeVett agent can also help smooth out potential roadblocks.
One final note for all the stressed home buyers and sellers out there.
Everyone is human and mistakes can be made, even by professionals. Kindness during a trying time can go a long way.
Take a deep breath and remind yourself that at the end of the day, no one in the history of the world has died from a delayed closing, and this too shall pass no matter how frustrating it feels in the moment.
Hang in there!