Whether you’re planning to buy or sell your home, it’s crucial to understand that there are many unforeseen events that may delay your close of escrow date. Since there are so many parties involved in any successful real estate transaction, it should be understandable that delays can happen. Let’s explore the top 5 causes of a delayed escrow closing.
A Refresher on Escrow
Before getting started, let’s review the role of escrow in a real estate transaction. Escrow is a service used when a seller and buyer agree on the purchase. The buyer and seller choose a neutral third-party agent to safeguard money and documents while obligations for closing are met.
The third-party escrow agent in most instances, takes a deposit from the buyer, which is a percentage of the sale. The property then enters into a “pending” status. Escrow is officially opened upon the receipt of an executed contract. The escrow agent will then collect the deposit funds, documents, and any instructions that will be needed for closing.
Top 5 Causes of Delayed Escrow Closing
1. The Lender Needs More Documents
Be sure to keep track of what documents you have sent to your lender. To get a mortgage loan, your bank will likely ask for proof of income, bank statements, photo ID, and more. They will gather these things to make sure you are employed and can make payments. Make sure you give them everything they ask for and check back in case they ask for more.
Occasionally, the lender will require additional forms at the last minute. These could be anything to approve the mortgage. It’s easy to forget to check up on this once your mortgage loan has been approved. The lender sometimes realizes they need more paperwork after you have been approved. Check back with your bank to make sure they have all the files they need.
2. Property Damage
The perfect home for you may not be completely perfect. It may well have some damage. This is not entirely an uncommon occurrence. Most properties will have at least a little wear and tear over the years. Be thorough when checking out your new house to make sure you don’t have any surprises later.
The buyer and seller will agree to either have the damage repaired or drop the price to remedy this issue. If you are a seller be sure to get on top of these repairs quickly. If you procrastinate, repairs could take longer than expected, and this will certainly delay the closing of escrow.
All buyers should also note that no property comes absolutely perfect. Be aware that the seller may fail to get the damage repaired or refuse to budge on the price. As a buyer, be sure to list any damages that need to be repaired. Check in with the seller to make sure the repairs are being completed. Either way, you’ll need to deal with this for the appraisal.
3. Appraisal Issues
Speaking of appraisals this is another common issue that will cause a delay in escrow closing. A bank appraisal, in most instances, may be required if the buyer is getting a mortgage to finance the home. Closing dates will get pushed back if the property is not appraised for a similar amount as the offer. Sometimes when this happens, it can be difficult for the buyer and seller to come to a new agreement.
Bank appraisals are a very common reason escrow closings are delayed. The bank appraisal can list repairs (though this can be negotiated). The lender will then determine if any repairs need to be made before approving and funding the loan. You will want to make sure your real estate agent is keeping up with what is required by the appraisal. After all, you don’t want to be a few days out from closing and learn there are required repairs.
Appraisals are something to keep up to date with to avoid delayed escrow closing. No matter if you are buying or selling, follow up with the appraisal and make sure it gets completed. Make sure the property is appraised for at least the price of the offer if not more.
4. Title Issues
To get escrow closed on time, the owner will need to have a title for the house. The term title refers to the document that names the parties that own the property. There can be many issues when it comes to the title of the property. It’s so common that there is a name for a title with issues needing to be resolved – a tangled title.
Owners living in a deceased relatives’ house and owners with a rent-to-own agreement usually have some trouble. Properties with past liens will likely cloud the title. These are only a few of the many issues associated with titles.
These problems are best simply avoided in the first place. Completing a title search will streamline the process. A title and escrow officer will work with the seller to clean any issues on title. Buyers can buy title insurance that keeps you covered if someone else claims the property. Remember, if a clear title can not be provided, the offer is void.
5. Final Walk-Through
Finally, you are nearing the end of this long road. The final walkthrough is crucial because it is the buyer’s last opportunity to go through the house. The buyer will soon own the home and will want to make sure everything is as it should be. The buyer should check the repairs, make sure the appliances are working, and check that the utilities are running.
The final walkthrough is often the day before or even the actual day of closing. So, if any of these things are out of order it will most certainly delay the closing of escrow. Sellers need to ensure the whole house is in ship shape on the day of the final walkthrough.
Avoiding Escrow Delay
No matter the reason, delayed escrow closing is a major headache. It is best to avoid these obstacles when possible. There are a few things you can do to make the process easier.
Don’t leave town while in escrow. It may seem strange, but there could be a reason you need to be at the property. You wouldn’t want to be hours away if something came up that required your physical presence.
Keep in touch with your agent. Good communication between the buyer and seller is key to a smooth transaction. Check in with your agent once or twice a week. This will keep you up to date with any complications needing attention.
Finally, make sure you have all the documents needed. There are a lot of them to keep track of. Make sure they are all signed and turned over to whoever needs them. You wouldn’t want a missing signature to stop you from getting that deal closed.
Reach Out For Support
Buying or selling a house can be a very stressful process. It doesn’t have to be when you select the right escrow company. For over a decade, New Venture Escrow has been the leading provider of escrow services throughout the Southern California region.
Buying or selling a house can be a very stressful process. It doesn’t have to be when you select the right escrow company. For over a decade, New Venture Escrow has been the leading provider of escrow services throughout the Southern California region.
New Venture Escrow’s investment in innovative technology and talent has made closing escrow faster and more transparent than ever before. Buyers, Sellers, and Agents can now receive real time escrow updates and interact with Vinny, our intelligent messaging agent, directly through their smartphone. Reach out today with any questions! We look forward to supporting you.
