Your home has been on the market for a few weeks and you’ve accepted the most appealing offer. SOLD! Well, not quite. Once you’ve accepted an offer on your home you enter the closing process – and it really is a process. Closing day, when the property actually changes ownership and keys are exchanged, is likely still a month or more away. What can you expect during the closing process? Are there ways to speed it up or common delays that you should be aware of? Absolutely!
How Long Will Closing Take?
On average closings in the South Metro Denver area are being completed between 30 and 45 days after going under contract if the buyer is taking out a mortgage loan for the home. If you accept a cash offer on your property, you will likely close MUCH sooner. Usually in two to three weeks, because there’s no loan needed. Of course, each transaction will vary slightly but there are certain things that you can expect to happen in a traditional closing (no mortgage). Let’s take a look:
- Buyers set a closing date (typically at least 30 days out).
- An Escrow account is opened to hold funds until the transaction closes.
- A title search is performed on the property to ensure it has a clean title and no defects.
- The buyer applies for a mortgage application which goes into underwriting, and then loan approval. This is the most time-consuming part of the home buying process. Most buyers will be pre-approved for the loan, and if the offer that you’ve accepted was, this will expedite the process!
- Appraisal to determine the property’s value and identify any needed repairs.
- Final walk-through to ensure all necessary repairs have been made, etc.
- The closing appointment! This is when all of the paperwork is signed and money is transferred.
Cash or Mortgage
If you’ve accepted a cash offer on your home, congratulations! You could be moved into your new home within the next month! Cash deals are far quicker to finalize than a sale that involves a mortgage loan. It eliminates step four that we mentioned above and the whole process only takes the time needed for the title and escrow companies to clear any liens, provide insurance, and get the paperwork ready.
Common Delays and How to Avoid Them
Financing. If the buyers’ loan is not approved the deal will undoubtedly fall through. The easiest way for a seller to avoid this is to ensure that any offer they are considering has a buyer who has been preapproved for the loan. Preapproval and prequalified are two different things and it’s always best to accept an offer that has been made by a preapproved buyer.
The appraisal is lower than the purchase price. This is another issue that can be fairly common, especially in the current market although the trend is cooling. If a buyer submits an offer with an appraisal gap this will ensure that they have the funds available to cover the gap between the appraised value of the home and what the bank will lend on it. If there is no appraisal gap written into the contract you could always renegotiate the price or request a second appraisal.
Major repairs are found during the inspection. If the home inspector finds costly issues with the property this can lead to buyers backing out of the deal altogether or renegotiating their offer price. The issue could be major repairs to the roof or foundation or pest infestations. You could have the home inspected prior to putting it on the market if you think that you may run into issues on the property. Oftentimes buyers will have an inspection contingency written into the contract. This means that the buyer can back out of the sale after reviewing the inspection report and still keep their earnest money deposit.
How Can We Help?
Our goal is to keep everyone informed on what’s happening in our community as well as in the real estate market. We sincerely hope that you have found this information on what to expect during the closing process valuable and if you need any help buying or selling, please reach out. Let us help you find your dream home, or put your home on the market!
If you would like more information on how the South Metro Denver Luxury Real Estate Market is doing, you can sign up for our monthly market report here.
We as a team are committed to supporting each other and our clients. If there’s anything you need at all, please get in touch!
Jeff Kloenne & Ryan Wilson & Vicki Zeeb
Certified Luxury Home Marketing Specialists
Coldwell Banker Residential Brokerage
Ryan (303) 916-8491
Jeff (303) 884-9830
Vicki (303) 549-6203
team@kloennewilsonzeeb.com