You got an offer on your house, Congratulations! Wait, don't think you're out of the woods yet! There are a lot of reasons your buyer won't make it to the closing table. Here are 7 ways how we can make sure that doesn't happen!
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Different websites have a different way they show Under Contract/Pending/Taking back-ups. Those are the status' we can input into the MLS once we've received and accepted offer. The seller then decides whether they are done showing the house or want to continue to show it and take back up offers. Under Contract and Pending are essentially the same thing; the house has an accepted offer, and the buyers are completing their due diligence: inspection, appraisal, survey, termite, etc. You may also see the status escape offer, which usually means the buyer has to sell their house to buy the house they have an offer on.
If all goes to plan, normally a seller will receive their proceeds from their sale within 30 to 60 days of having an accepted offer. Some types of loans take longer to close due to more paperwork or if a buyer asks for more contingencies like a survey.
Once the offer is accepted, both buyer and seller sign, next the earnest money is paid, if it is in the contract. If there is a reason for backing out of the contract, the earnest money may be returned, but both the buyer and seller have to agree. This can delay a contract from closing if the buyer fails to pay as the contract states or doesn't pay in a timely manner. Seller's will want to make sure to have the earnest money before any expenditures; like repairs or survey is completed.
Secondly, once a buyer has an accepted offer, they need to send a copy to their lender. The loan officer can lock in the interest rate and get an appraisal ordered. As a seller or seller's agent, this allows you to verify the lender and company they are working with and if they are actually approved. You'll want to ask if they really think the buyer will be able to complete the process. Preapproval offers are not a guarantee, because you can lose your job/get fired, make a stupid purchase. If you are the buyer, educate yourself of smart things to do while waiting for your home to close. Buying a new car or furniture isn't either of them!
The third way a closing can change how long a house is under contract is Inspections. The best thing for a seller to do is a pre-listing inspection. This way you can get issues taken care of before the house is even listed and give the buyer less concerns. Buyers must do their due diligence for any type of inspection and not rely on disclosures. During some markets, it may be difficult to find an inspector to schedule during the 10 business day time period. The closing time period may have to be delayed allowing time for the inspection and request repairs. Sellers should be prepared for unreasonable requests, like every single issue on the inspection report to be fixed, when things like GFCI are grandfathered in and are a recommendation not a repair. Some sellers may not be willing to make any repairs, and buyers should be prepared for this and consider if they are able to make the repairs themselves, or if their lender will approve the house without the repairs. The inspection repairs must be acceptable to both sides for the deal to move forward. If there are a lot of repairs, it can take time for quotes and repairs to be finished. This can be another delay to closing and seller's proceeds.
How long a house is under contract is often impacted by the appraisal. Nobody gets to choose who does the appraisal; not the lender, the buyer nor the seller. It is a lottery and whoever picks it up first for an acceptable price does the appraisal. Sometimes it takes them longer than the time period they agreed to and sometimes they can't find comparable homes since they are out of the area. Keep in mind a buyer can dispute an appraisal. A second appraisal can be ordered if the first doesn't meet with the terms or the agreement. Sometimes a buyer has to pay more than the appraisal if a higher price was agreed to in the contract. Buyers may be at risk for this in a multiple offer situation, especially if the offer is higher than the listing price. Sometimes a seller has to take lower because the appraisal was less than the offer. An appraisal may request additional repairs especially if it is an FHA, RD or VA appraisal which requires a health and safety inspection. Appraisals are usually the last thing you're waiting on before you can close.
Title work can also cause a delay to closing on a contract. If the house was inherited, it may have to go through probate before being able to sell. This can take a few weeks or a few months. A title search may reveal unpaid taxes other liens or a divorce. If you are selling a property, these have to be paid before title can be transferred. If there is a divorce, your ex-spouse may have to sign the deed an agree to do so. In Arkansas both spouses sign whether they were married when bought or not, so it is why title companies will always ask the marital status of a seller prior to closing. If you are aware of any of these issues, try to address them before listing your house for sale so when you do receive an offer, there are no changes in the closing date.
How long a house is under contract may be delayed by other issues also. If there are other contingencies in the offer, like survey, you may have to wait for the surveyor to get to you on his schedule. If the buyer has a contingency such as selling their home, there may be a delay in the closing if they don't receive an offer or their closing falls through. Even if the property isn't going through probate, their still may need to be a court approval before closing can be scheduled. Make sure to stay in touch with your agent throughout the process so you are aware of any hiccups!
Lastly, the scheduled closing may not be the actual day of closing. Buyers have backed out at the last minute due to job loss. Wire transfers have been sent to the wrong place. Buyers can just change their minds. All of has happened and any of it can happen to you. There really isn't any way to be prepared for those extreme circumstances, but your home is not sold until it is! It is official once the buyer (and lender) has paid, and the seller has signed the deed. Until that time, all offers must be presented to a seller even if they do not want to take back up offers.
Just because you are under contract, it doesn't mean your house will close. It's important to have a good professional on your side to keep you updated and on track throughout the process. There are many steps throughout the process which can cause snags, but with someone working for you, you can be aware and feel in better control.
Please reach out to us with any questions about the sale process or if you are interested in selling your home!
