Now here’s bad news: This week the National Association of Realtors reported, 37% of real estate buyers running into financial issues
Delayed in escrow? You’re not alone. According to the National Association of Realtors’ most recent Confidence Index Survey, only 77% of homes close escrow on time. Another 19% are delayed but close eventually. In 4% of home sales, the contract is terminated and the home does not close.
Escrow begins at the moment the seller accepts an offer on the home and the buyer deposits earnest money. It ends at the “closing”, when the final paperwork is signed and the seller’s hands off the keys to the buyer. Generally, real estate agents and their clients try to avoid moving this date, but sometimes pushing it back is the only alternative to having the deal fall through.
Why would escrow be extended and the closing delayed? Here are some more numbers from the NAR survey:
- In 37% of cases, buyers run into financing issues. They may need to postpone the closing date in order to supply the necessary documentation to their lender, or they may incur new debts that throw off their debt-to-income ratio and disqualify them for the mortgage (purchasing new appliances, etc.)
- In 18% of delayed closings, the home appraisal comes in too low.
- This reduces the amount of money the lender is willing to pay for the home, so the buyer must either pay more out of pocket, offer the seller a lower amount, or get the home re-appraised, which can take extra time.
- Affecting 16% of delayed closings, the third-most-common reason for delays is the home inspection. Most homebuyers build a home inspection contingency into their contract, meaning they can back out or renegotiate if the home inspection turns up problems with the home. Usually, sellers can offer the buyer credit in lieu of repairs, allowing an on-time home closing.
- Title and deed issues affected 13% of delayed closings. There are many reasons that obtaining a clean title is complicated;
- Other contingencies stated in the contract delayed 9% of closings. Aside from inspection, appraisal, financing, and title contingencies, the most common is a sales contingency, where the buyer needs to sell their current home before they can close on the new one.
- Finally, “other” reasons were cited in 25% of delayed home sales. These include difficulty obtaining insurance for the home, the buyer losing their job, or simply having a life event prevent them from being present at the closing.
Having a buyers’ and sellers’ agent involved in the Boston condo sale greatly reduces the chance of delayed closings or deals falling through. From staying on top of requests from the lender to ensure that the mortgage is approved to providing comps to the home appraiser, to renegotiating if the home inspection turns up work to be done. If you’re thinking about buying a downtown high rise condo, a new Boston Seaport condo, or a Charles River Park condominium please call us at 617-595-2712 or email firstname.lastname@example.org