Buying a home can be one of the most heart-wrenching and nauseating adventures of your life. But once closing is scheduled, that’s it, right? The stomach-in-your-throat feeling should go away and all is smooth sailing.
Well, not always. There are many reasons closings may get delayed. Don’t let this list get you down, but it’s a great bit of knowledge to tuck away just in case. Try to remember that sometimes delayed closings do actually happen.
Repairs Were Delayed
In this age of short labor and uncertain supply chains, repair delays are inevitable. It happens in ideal times, too. Maybe it happens because a part didn’t come in for that water heater that was on your repair sheet, or there was no one available to fix the siding where someone’s grill got a little overly excited and left a mark.
Sometimes you have no choice but to wait to close, especially if you’re using a loan type that requires the requested repairs be made prior to closing. But, in other cases, your real estate agent can create an addendum to your contract that allows the closing company to hold the cost of repairs in an escrow account for you, so that they are made on your behalf once the labor and materials are available.
Many homebuyers, especially first-timers, don’t realize that their financial information will be verified again prior to closing. It has to match, more or less, what it was when you applied. So, same job, same amount of money in the bank, same amount of debt (or less, less is ok), same everything. Usually that’s possible within the narrow window between loan approval and closing.
Unfortunately, sometimes things go wrong, and that second verification reveals a new credit line that’s been opened (for new house stuff, of course), or a change in employment, or some other problem. In these cases, closing will be delayed until those issues can be resolved. Moral of the story? Don’t do anything financially interesting between approval and closing, and all will be well.
Appraisal Was Too Low
In the current real estate atmosphere, with prices changing radically at the drop of a hat in some markets, it’s not unusual to hear of a closing that’s been delayed due to an issue with the appraisal. Of course, the issue isn’t with the appraisal, so much as it is with the market data no longer supporting the seller’s asking price for their home. The appraisal is just numbers on a page, based on what’s already been sold. A too-low appraisal can delay closing, since sometimes a second appraisal will be needed to verify that there were no errors in the first appraisal, or the seller and buyer will have to go back to the table and renegotiate the terms of the contract.
If you have to renegotiate your contract, it’s likely going to be due to your bank’s unwillingness to loan more than the house will appraise for at that moment. In that case, the contract will need to be reduced to the appraisal price. Sometimes this is possible, sometimes it’s not if the seller owes a fair amount on their house or needs the difference to make their next purchase. There’s not a lot you can do if you can’t come to terms, but most of the time, your real estate agent and closing agents will find a way.