Whether you’re on the buying or selling end of a real estate deal, you probably have a specific date in mind for when you’d like the deal to close. But generally speaking, closing shouldn’t be too quick nor too long. A closing date that’s too soon could make it very difficult for the buyer to secure financing in time, while an extended escrow time frame can increase carrying costs for the seller.
The question is, how long does it take to close on a real estate deal?
What Needs to Happen Before Closing?
Depending on your exact location, the average length of time between offer acceptance and final closing date will range. Not only that, but the number of professionals and the types of processes involved in closing can also vary. Such differences can play a role in how long buyers and sellers can expect escrow to take before closing.
That said, there are certain factors that must be met in order for closing to take place, including the following:
- All terms of the purchase agreement are satisfied
- Earnest money is deposited
- Contingencies are fulfilled or waived
- Final walk-through is conducted
- The buyer’s funds from the lender are deposited appropriately
- Lender’s appraisal is conducted and approved
- Lender’s mortgage approval is signed
- All mortgage documents are signed by the buyer
- The deed is deposited by the seller
Only when all associated terms of the agreement have been fulfilled can closing take place. Unfortunately, it’s not uncommon for delays in escrow to happen. There are several different reasons why closing is either pushed out or fails to occur at all, such as the following:
- Delays from the mortgage underwriter
- Stringent mortgage guidelines
- Appraisal comes in low
- Missing documentation
- Incomplete mortgage application
- Buyer takes out additional credit
- Buyer makes a change in employment or income
- Errors are found on the buyer’s credit report
- Liens are discovered on title
- Loan commitment expired
- Buyer is unsatisfied with the home inspection
- Agreed-upon repairs are not made by the seller
This list is certainly not exhaustive. There are plenty of little nuances that can come into play that may cause a delay in closing. That’s why it’s so important for all parties involved – including the buyer and seller – to do what’s necessary to move the deal along and not make any moves that could throw a wrench in the deal.
How Long Does Closing Typically Take?
If all ducks are in a row and both buyer and seller have done their due diligence, there should be no reason for any delays in closing. That said, the factor that tends to be the most involved and time-consuming throughout escrow is the mortgage process. According to Fannie Mae, the average closing time for mortgages is about 45 days.
The Bottom Line
The exact amount of time that it takes to close on a real estate deal is influenced by so many different factors. Every entity involved in the transaction has their own set of responsibilities, and each plays a key role in how long it takes for escrow to close.
Some factors are certainly within your control, while others are not. All you can do is make sure that you’ve kept up your end of the deal and work with professionals who have a good track record of keeping up theirs as well.