Congratulations, your offer has been accepted! Finding a property you want to buy can be a challenging process, and then getting an offer accepted can be even more challenging in a competitive market.
After you reach this major milestone, there are a few things that can cause delays during the escrow process. According to one survey, about 26% of real estate transactions involve a closing delay of some kind. Some of these delays are out of your control as a buyer, but there are some things you can do to make it a smooth process.
Problems with Financing
In any type of transaction other than an all cash offer, some type of financing will be involved. Any issues with the financing process can cause delays. While some of these may be out of your control, there are a few things you can do to ensure that your loan is fully funded on schedule.
During the escrow process:
- Avoid opening any new credit accounts
- Wait to make any large purchases like a new vehicle, appliances, or furniture
- Don’t make any changes to your employment or income
- Do not accept a large gift that is not expected by your mortgage lender, or deposit a large sum of cash
- Make sure to secure a personal check or schedule a wire transfer for the down payment and closing costs prior to closing day
Home Appraises Lower than Your Offer
“During the escrow process, your lender will require a home appraisal to determine the value of the home. This is the way they can ensure that the price you are paying (and the amount they are lending to you) is reasonably equivalent to the value of the asset. This is one way the lender can protect themselves.” – Jamie Szeibert, Niagara ON Real Estate Agent
“If the home appraisal comes back lower than the offer that was accepted, you will have to make some changes. You can negotiate a lower sales price with the seller, if they are willing. You may also put more money down, to limit the risk taken on by the lender if you are still confident with the purchase in spite of the lower appraisal. It is also an option to challenge the appraisal and request a review, if you are confident that it should have appraised higher.” – Pam Pester, Commercial Tampa Realtor®
Home Inspection Reveals Major Damage
“Another essential component of the escrow process is the home inspection. This is the process of hiring a professional home inspector to determine the condition of the home and, ideally, reveal any potential problems with it.” Devin Stephens, Canmore Real Estate
In some cases, the home inspection may reveal major repairs that are needed. If this is the case, you as the buyer can choose to move forward in a few different ways. You can back out of the deal if the problem that was discovered is more than you want to deal with, or you can negotiate with the seller to resolve it. The seller may have the problem repaired before closing, offer you a credit towards the repair, or lower the sales price to compensate for the condition of the home.
Delays in Homeowners Association Approval
A final delay that can take place comes from the Homeowners Association (HOA). If you are buying a home in a community with an HOA, you will need to transfer the HOA account from the sellers to you. The best way to avoid delays is to submit any necessary paperwork as early as possible, right after having an offer accepted.