3 Obstacles That May Come up at Closing
Buyer, seller, Loan Officer, Realtor… no matter what role you play in a real estate transaction, closing delays are a nightmare. Worse, they’re a nightmare that can happen to even the most well-prepared people. Here are three common obstacles that may crop up at closing time — and what you can do about them.
- The home isn’t ready. Maybe the home inspection uncovered a serious problem that can’t be resolved quickly — or maybe what should’ve been a quick repair just isn’t getting done on schedule. Sometimes the seller hasn’t finished packing or moving, or items that were promised in the contract aren’t present. Rather than going to the trouble of extending the closing date, this is usually a good time to renegotiate based on the new information. Repairs taking longer than planned? Set up a repair escrow. That washer and dryer promised in the contract went mysteriously missing? If the items can’t be returned, the seller can compensate for their replacement.
- The seller isn’t ready. If the seller is moving into a new home and something happens to prolong that timeline, they may not be ready to vacate the property as early as planned. It’s easier to renegotiate move-in dates than to re-negotiate closing dates, so if possible, try the former before you attempt the latter.
- Financial hiccups. Whether it’s one of those extremely common lender delays or something more serious, like financing falling through or an appraisal coming back too low, financial snags can bring closing to a grinding halt. For lender delays, you may need an amendment to provide more time for approval. If, despite pre-approval, the buyer’s mortgage loan falls through, it’s time to find a new lender ASAP. And in case of a low appraisal, the purchase price may need to be revised to match.
You can’t prevent every problem, but you can be prepared to tackle them should they come up! Closing delays happen — make sure you know what you’re going to do about them when they do.