Now, exactly how long does it take to close on a house? It’s the eternal question in real estate—for both buyers and sellers. Read on to get the gist of the closing process and the timeline you can expect, plus a guide to what can slow things down in the home-buying process—or speed things up.
How long will it take to complete the process?
One recent study found that real estate closing times are getting longer—on average it now takes 50 days. And while that may seem like an eternity to eager buyers or sellers, there’s good reason home buying doesn’t happen lickety-split. For one, buyers who require mortgagesthrough lenders must finish the loan application process and home appraisal.
Home buyers should also use this time to complete their due diligence by reviewing the property title and completing a home inspection, says Todd Huettner of Huettner Capital. This chunk of time also gives both the seller and buyer time to plan their move.
What can slow down a closing?
Even though a mortgage has been secured and a property is under contract, the occasional hitch can take the closing process from warp speed to ultra slo-mo. This is where you learn that sometimes, the most seemingly straightforward home-buying process can still be fraught with obstacles.
It turns out, home buying is more than just saving for a down payment, completing a mortgage application, and making an offer. Even if the terms of the sale are agreed upon by all parties, it’s still wise to anticipate a bump or two in the road.
Here are the typical hiccups—ranging from lender snags to insurance oversights—that can increase the time it takes to close on a home sale.
- Funds: Yes, you guessed it. The most common reason for a delayed closing is usually related to buyer financing, says Jerry Koller of California’s International Home. The leading issue: getting a mortgage approved by a lender. Buyers can avoid this time drain by obtaining a mortgage pre-approval letter from the lender, something many sellers require along with an offer. And remember, even with a mortgage pre-qualification for a conventional loan, it can take 30 days for the lender to complete its due diligence once an offer is made, so plan accordingly. All-cash buyers save a significant amount of time by avoiding the mortgage process—a fairly obvious real estate fact of life but one worth noting nonetheless. (Side note: Choose a loan officer who communicates well and can walk you through the process step by step, and financing will feel much less overwhelming.)
- Appraisal disparities: In order for a mortgage to be approved, the lender needs an appraiser to value the home. But if the appraiser’s valuation comes in low, it will take time to renegotiate the price of the real estate and rework the mortgage through the lender.
- No insurance: Failing to secure homeowner insurance until the last minute slows down a closing, since it’s often required in the terms of the mortgage before you move in, says Paul Moore, a real estate agent and broker in Virginia. Be sure you know ahead of time what, if any, insurance stipulations your home loan has.
- Contingencies: “If a buyer needs to sell their existing home and/or a seller needs to buy a new home, this could also delay the expected closing date,” says Colin T. McDonald at Re/Max Capital in Albany, NY.
- Short sale: Sometimes a home is sold at a price lower than what the owner still owes on the mortgage. This is known as a short sale. In this case, the owner must have the lender for the original mortgage loan agree to accept a pay-off amount lower than the remaining balance on the mortgage. This can sometimes prove a challenging task and can potentially impede the closing process.
How to speed up a closing
If you want to ensure your purchase reaches the closing date finish line in record time, here are things you can do to help.
- Resolve title issues: Sellers should resolve any problems—such as a tax lien—regarding the title to the property, says Susan Naftulin, president of Rehab Financial Group. Provide the title company with copies of the satisfactions before the title search, to avoid any red flags. If you haven’t satisfied the lien, informing the title company that you want it paid out of closing proceeds will keep the process moving along.
- Address repairs: A home inspection usually generates a laundry list of repairs that need to be resolved before closing. While sellers can make the repairs, in general, it’s much faster for them to just reduce the price or give the home buyers a tax credit so they can make their repairs on their own time.
- Communicate: Jack Matos, director of escrow operations at Proper Title, based in Palatine, IL, says buyers with questions about the closing documents or walk-through concerns need to immediately inform their Realtor® or attorneys. “Any significant changes at this late hour will require new forms and review periods,” he says. All that said, don’t feel pressured to just rush through things without fully understanding them. Your real estate agent is there to make sure you’re comfortable throughout the entire closing process. When in doubt, don’t be afraid to take a breather and discuss whatever’s nagging you, until you’re confident you can sign on the dotted line.