The process of closing on a home is just that--a process. Once a purchase offer is accepted, both the seller and the buyer are eager for the deal to be done. But how long does it really take to close on a house?
Average home closing time frame
Recent data shows that closing times have actually decreased in 2017—on average it now takes 42 days. While this may seem long, there are many factors that can speed up or slow down the process. The biggest factor is whether the buyer is applying for mortgage loan. If so, it will usually take 6 to 8 weeks to close.
Cash buyers who aren't relying on loans can close much faster. In theory, it can happen as soon as the buyer and seller agree on a price. Even an all cash offer won’t result in an instant close though. At a minimum the buyer and seller must prepare a deed and transfer the title to the property. Once these basic conditions are met, closing can happen in as little as 9 days.
What can slow down a closing?
During the mortgage application process, the bank will request an appraisal of the house. If the appraisal comes in lower than the purchase price, the bank will not approve the loan. It will then take some time to renegotiate the price or seek out a second opinion on the appraisal. The only way to avoid this delay is to pay the difference in cash.
During the escrow process, a title company will search for liens and other issues that can prevent the title from transferring. If anyone else has a legal claim to the property, this issue must be resolved or the closing will fall through.
Every real estate professional involved in the home closing is a potential point of failure or delay. That's why it's critical that everyone involved is on their "A-game."
Just picture any of the following scenarios:
- The real estate agent didn't get the required documents signed and returned to the lender.
- The mortgage consultant didn't turn in all the documents to the underwriter.
- The attorney goes on a two week vacation and doesn't take calls or check emails.
- The bank asks for repairs but then the bank appraiser delays re-inspection once they're done.
If just one person decides to “drag their feet” during a real estate transaction, you can bank on a delayed closing.
Financing Falls Through
Even if the buyer is pre-approved for a home loan, there are factors that can prevent the loan from closing. If the buyer does not accurately report their income, savings, or job status, or any of these factors change before closing, the loan may fall through.
It’s also important for the buyer not to make any large purchases and avoid any credit inquiries before and/or after the loan is approved.
Many lenders re-check the buyer’s credit status just days before the scheduled closing. If the lender sees a negative change, this could be a show stopper. Changes to the buyer’s financial or job situation can mean outright loan denial.
Home Inspection Issues
Home inspections are a necessary part of the buyer's due diligence before closing. Defects discovered during the home inspection may need addressing before the house is sold.
Usually, the seller will agree to do one of two things:
Make the repairs before closing (and once the buyer receives their mortgage commitment, if applicable).
Give the buyer a credit at closing as a seller concession, so they can make the repairs themselves.
If the seller agrees to make repairs themselves, this could result in closing delays. And if the seller forgets or neglects to do them in time, that can complicate things further.
If the seller does not agree to either make repairs or offer a credit, this could result in a stalemate that puts the closing off indefinitely.
How to speed up a closing
Resolve Title Issues
Any title issue, no matter how small, must be resolved in order to offer a clear title to the buyer and close. That’s why sellers should make every effort to resolve any problems—such as a tax lien—concerning the title to the property.
Once resolved, it’s a good idea to provide the title company with copies of the satisfactions before the title search.
If you haven’t satisfied the lien and want to keep the process moving along, you may be able to pay it out of closing proceeds. Make sure to check the title insurance company beforehand, as this would require their approval.
Sell to a Cash Buyer
If you’re facing financial difficulties, need to relocate quickly, or the speed of the sale is your top priority, then selling your home to a cash buyer is your best bet. Cash buyers have the ability to close faster than any other type of home buyer. The vast majority of the time closing will take less than a month, and in many cases it can be done in a matter of days!
Selling your house to a cash buyer (usually a real estate investor) means removing any question of whether they can receive financing.
Because paying in cash means not having to apply for a mortgage. The mortgage approval process takes about 3-5 weeks—and that’s if nothing goes wrong! Financing is one of the biggest contributing factors to closing delays.
Investors also tend to buy houses in “as-is” condition. That means the seller doesn’t have to worry about making cosmetic or functional repairs, cleaning the house, or even removing all their unwanted belongings.
If you decide to put your house on the open market and wait for a more traditional buyer, you may have a laundry list of repairs that need to be resolved before closing. While the seller does have the option to make the repairs, it’s often faster to reduce the price or give the buyers a property tax credit.