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The Most Common Reasons Why Closings Are Delayed

The real estate process is rarely ever smooth, but the payoffs are worth it. The result of all of the internet searching, driving around, home tours, and submitting offers is getting the keys to your new home. Especially in the post-COVID real estate boom, lenders, buyers, and sellers are overwhelmed with offers, applications, and fierce competition.

Once an offer is accepted and the home is put under contract, there is still work to do—some of which may result in the contract settlement being delayed. According to the National Association of REALTORS’ most recent consumer confidence survey, here are the most common reasons why contracts are delayed:

  • Issues in obtaining/securing financing: 29%
  • Appraisal issues: 23%
  • Title/deed issues: 13%
  • Home inspection/Environmental problems: 12%
  • Contingencies stated in the contract: 5%
  • Buyers lost job: 2%
  • Issues if the property is distressed: 2%
  • Home/Hazard/Flood insurance issues: 2%

NAR listed the remaining 12% of problems as “other”

Overall, 68% of contracts nationwide closed without delay and the buyers were handed the keys to their new home. On top of that, 26% of contracts were delayed in some form and were closed after resolution.

However, only 6% of contracts were delayed and terminated. Here are the most common reasons why contracts were terminated nationwide:

  • Appraisal issues: 11%
  • Issues in obtaining/securing financing: 10%
  • Home inspection/Environmental problems: 9%
  • Title/Deed issues: 4%
  • Other 4%
  • Contingencies stated in the contract: 3%
  • Buyers lost job: 1%
  • Issues if the property is distressed: 1%
  • Home/Hazard/Flood insurance issues: 1%

What are the biggest takeaways from this data? First, the most important is to get your finances in order before shopping for a home in earnest. Getting pre-approved is the most powerful way to show sellers your offer is serious and to prove to lenders and yourself how much you can afford. Even all-cash buyers can run into financing problems. Get your finances in order early.

Second, this shows that contingencies are important and necessary. Waving all contingencies—especially appraisal and inspections—has become a surefire way to stand out and attempt to secure the winning bid. However, they reveal important information about the current condition of the house. As a buyer, you want to make a confident, informed decision about the home you are about to spend hundreds of thousands (or millions) of dollars on. Some people will take the risk and buy a house and know little about its inner workings. Sometimes it pays off; sometimes the buyers are treated to expensive repair bills early on. Take a little extra time to make sure your investment is worth it.

As usual, consult with your real estate agent for the best ways to handle the situation. They have the knowledge and experience to act solely in your best interest to achieve the best outcome for you.

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