How long does it take to close on a house
you are buying (or selling)?
Whether you are buying or selling a home, the length of time it takes to get the home closed can depend on several factors. Some of the main ones are the type of financing, the inspection process, the appraisal process, contingencies placed on the home purchase, and most importantly the level of communication and cooperation between the parties involved. If you and your Realtor pay attention to these areas and avoid complications, then you should get to close in a reasonable time period. Here is what to watch for.
Since it is arguably the most important, and the easiest of the bunch to get right, we will start with cooperation and communication between the parties of the real estate transaction. From the time you have a signed purchase agreement for the property sale to closing, at the minimum there will be a home buyer, a seller, a loan officer (likely), an inspector (unless you are a fool), and a title company involved. It is imperative that these people (or agencies) maintain good communication throughout the process so that everyone stays in synchronicity and steadily moves toward closing with a as few hiccups as possible. Sounds simple, but you would be surprised how often this not happening can cause issues if your agent is not diligent.
Next we will look at contractual contingencies. This is pretty straight forward as most contingencies placed on a purchase agreement will have a designated time line for them to happen in. In my opinion, if they do not, then you should not accept the agreement until they do. Otherwise you are taking the risk of having a home take years (if ever) to get to close.
Continuing to work backwards we come to the appraisal process. In a perfect world, the appraisal takes about three to five days….but we don’t live in a perfect world. The first thing that pops in my mind when the list of worries arrives is that if you are getting a VA loan, the appraiser has a full twenty one days to conduct the appraisal. They seldom take it, but if you are a Veteran and are taking full advantage of this benefit, you should be aware of this possibility.
The next situation that is likely to cause a closing to be delayed is if the house does not appraise for as much money as the purchase agreement is written for. This can result in the contract being cancelled, or in further negotiations which can take as long or as little time as the parties are willing to carry on with them to reach an agreement.
The third major delay in the appraisal process would be in the case of an appraiser stating that a home would be of value, with a particular repair being done. This most frequently happens with VA or FHA loans. In that case any delay would be the direct result of renegotiation time and however long it took to make the repairs in question.
An unexpected, under appraised home or surprise appraisal required repairs can be avoided by using a quality real estate professional to assist in buying or selling your home. Your Realtor understanding lender requirements and performing an accurate comparative market analysis on the home can help keep your closing from being delayed by ensuring the appraisal will be in line with the agreement you reached.
The full home inspection process should only take about 10 days. However, the inspection process can also delay your closing considerably, but this will typically only happen if you and your real estate agent have not done your due diligence. When seeing the home, it is important to look for defects, and if you are working under a buyers agreement your agent should be looking for them with you. Certainly neither of you have the same level of knowledge as a licensed home inspector…and you should use one even if you work in construction; as a good inspector will save you a ton of money, but taking a little extra time to look for potential problems, and negotiating price based on what you see can save you a lengthy and stressful negotiation over what a seller will and will not repair in order to close the deal.
Because this particular section can be very in depth an I have previously written about what to expect when you get a bad home inspection report back, here is an article about just that.
Finally we arrive at how the type of financing can affect closing times. If its a cash deal, theoretically you could close just as fast as the title company can clear title which would normally be three to five days. With a preapproved buyer and using a dedicated mortgage lender, most mortgage types will take less than 30 days to get fully through that process…and can take as little as a couple of weeks. With a VA Loan, this is still possible…but I like to give 45 day for financing on them, because sometimes the process can take a little longer as they have different underwriting requirements. As previously noted, sometimes the VA appraisal can take a full 21 days to get done.
I want to make special note of the fact that I specified a dedicated mortgage lender, preferably local. This matters. It’s not that your local bank can’t finance a home…it is more that they just are not set up to do it efficiently. As a result, using a traditional bank to secure your mortgage is likely to slow the whole process down.
In a nutshell, barring these kinds of problems your closing should not take more than 45 days from the date of your accepted purchase agreement. You can realistically expect to close on a house within 30 days if things go well, and if you happen to be one of the privileged few that can pay cash for your new home with no title issues, we can have you in your new home in less than a week.
If you would like this kind of expert realty service guiding your next home sale or property purchase, give me a call at 317-657-8059 or email robb@BlueRibbonTeam.com to set up a free consultation.