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Thomas Barwick/Getty Images July 21, 2022 Michele Petry is a senior editor for Bankrate, leading the site’s real estate content. Bankrate logo The Bankrate promise
At Bankrate we strive to help you make smarter financial decisions. While we adhere to strict editorial integrity, this post may contain references to products from our partners. Here's an explanation for how we make money. Bankrate logo The Bankrate promise
Founded in 1976, Bankrate has a long track record of helping people make smart financial choices. We’ve maintained this reputation for over four decades by demystifying the financial decision-making process and giving people confidence in which actions to take next. Bankrate follows a strict , so you can trust that we’re putting your interests first. All of our content is authored by and edited by , who ensure everything we publish is objective, accurate and trustworthy. Buying or selling a home is one of the biggest financial decisions an individual will ever make. Our real estate reporters and editors focus on educating consumers about this life-changing transaction and how to navigate the complex and ever-changing housing market. From finding an agent to closing and beyond, our goal is to help you feel confident that you're making the best, and smartest, real estate deal possible. Bankrate logo Editorial integrity
Bankrate follows a strict , so you can trust that we’re putting your interests first. Our award-winning editors and reporters create honest and accurate content to help you make the right financial decisions. Key Principles
We value your trust. Our mission is to provide readers with accurate and unbiased information, and we have editorial standards in place to ensure that happens. Our editors and reporters thoroughly fact-check editorial content to ensure the information you’re reading is accurate. We maintain a firewall between our advertisers and our editorial team. Our editorial team does not receive direct compensation from our advertisers. Editorial Independence
Bankrate’s editorial team writes on behalf of YOU – the reader. Our goal is to give you the best advice to help you make smart personal finance decisions. We follow strict guidelines to ensure that our editorial content is not influenced by advertisers. Our editorial team receives no direct compensation from advertisers, and our content is thoroughly fact-checked to ensure accuracy. So, whether you’re reading an article or a review, you can trust that you’re getting credible and dependable information. Bankrate logo How we make money
You have money questions. Bankrate has answers. Our experts have been helping you master your money for over four decades. We continually strive to provide consumers with the expert advice and tools needed to succeed throughout life’s financial journey. Bankrate follows a strict , so you can trust that our content is honest and accurate. Our award-winning editors and reporters create honest and accurate content to help you make the right financial decisions. The content created by our editorial staff is objective, factual, and not influenced by our advertisers. We’re transparent about how we are able to bring quality content, competitive rates, and useful tools to you by explaining how we make money. Bankrate.com is an independent, advertising-supported publisher and comparison service. We are compensated in exchange for placement of sponsored products and, services, or by you clicking on certain links posted on our site. Therefore, this compensation may impact how, where and in what order products appear within listing categories. Other factors, such as our own proprietary website rules and whether a product is offered in your area or at your self-selected credit score range can also impact how and where products appear on this site. While we strive to provide a wide range offers, Bankrate does not include information about every financial or credit product or service. An accepted offer on a home doesn’t deliver immediate gratification. Sure, the buyer and seller might be pleased with the dollar amount, but a lot still needs to occur before that money changes hands. And even after , there are plenty of potential potholes along the road to transferring ownership of the property. According to May 2022 data from (NAR), 17 percent of recent home sales encountered delays. Whether you’re the buyer or the seller, no one wants to wait longer than they need to for a real estate transaction to be completed. Here are five of the most common problems that lead to delayed closings.
1 The financing falls through
Even when a homebuyer is , the loan is not guaranteed. The lender still needs to review the buyer’s finances and officially . As interest rates have risen in recent months, some buyers have faced uphill battles in being able to qualify for their loans. “We’re seeing many more buyers who are having financing challenges,” says Lisa Harris, a Realtor with RE/MAX Center in Braselton, Georgia. “In most cases, they were preapproved several months ago, when rates were lower, and their buying power has diminished with the increase in interest rates.” Significant changes to a buyer’s profile can also create financing delays. For example, if you get approved for a loan and then make a major life decision that impacts your cash flow or your — switch jobs or buy a new car, for example — it’s common to see the home closing pushed back.
2 The appraisal falls short
Any lender will require a to verify that the property is indeed worth the price a buyer has agreed to pay for it. The lender is taking a risk, after all, and needs to be reasonably sure of their ability to recoup their losses should the buyer fail to pay. As home prices have soared to record highs in recent months, appraisal gaps — in which the of the home — have become more common. This doesn’t necessarily kill the deal, but addressing it can take time. In fact, according to NAR, 21 percent of all delayed contracts are delayed due to appraisal issues. “We continue to see some low appraisals,” Harris says. “This is typically when there are multiple bids on a property, so I always try to make sure the buyer is prepared to pay the difference if the appraisal is low.”
3 The home inspection reveals big problems
After a buyer’s offer is accepted, the next step is usually to get a professional opinion about the condition of the home. Sometimes, these will uncover serious issues — the need for a new roof or a major plumbing problem, for example. In this situation, the buyer will typically ask the seller to do something to address the issue, like repair it or offer a reduction in price to cover the expense of the repair. That back-and-forth negotiation can require the closing date to be pushed back. While Harris says she would never recommend , the home inspection contingency “seems to be the most popular area to initially target” in order to make an offer more competitive, she says. “A great way for a seller to offset this challenge is to get a pre-listing inspection,” Harris says. “Buyers can also tackle this hurdle by trying to pre-schedule their inspection so that it’s essentially completed the day they go under contract. This way, they are only out the $500 to $600 for the inspection, versus thousands in earnest money.”
4 Issues with the title search
Before handing over a sizable chunk of money to purchase a home, buyers need to make sure that the person they’re buying from actually has the right to sell the property. This happens in the form of a title search. The can uncover a wide range of challenges, such as previous owners still having a claim to the home, unpaid property taxes or liens against the home. These legal issues can be difficult to untangle. Around 11 percent of delayed closings are due to title and deed issues, according to NAR.
5 Contingency failures
Many agreements to purchase a home include , which allow the buyer or the seller to cancel the deal if certain things do not happen. (In other words, the sale is contingent on these criteria being met.) For example, a buyer might include the contingency that he or she must be able to sell their current home prior to purchasing the new one. If the buyer does not manage to sell their property within the agreed-upon timeframe — ie, if that contingency fails to be met — the deal will fall through. When someone is buying a home, they need to be able to protect their investment. Thus, another common contingency involves the ability to secure . Insurance isn’t guaranteed: For example, if a home is located in an area with serious risk of wildfires, flooding or other , finding a company to issue a new policy can be difficult. Appraisal and inspection contingencies are also common. Bottom line
Whether you’re buying or selling a home, the process can be stressful. A delayed closing just makes things worse. While some issues are out of your control — you have no say over the market’s interest rate fluctuations, for example — the best way to avoid problems is to follow the guidance from the experts on your team. Your , your and your can help you check off all the boxes to make sure you’re doing everything possible to reach the finish line on schedule. SHARE: Michele Petry is a senior editor for Bankrate, leading the site’s real estate content. Related Articles