Most buyers and sellers circle the closing date on their calendars and assume it is final. Unfortunately, real estate transactions don’t always go according to plan, and closing dates are one of the most common terms that must be renegotiated. When that happens, it usually disrupts the lives of both buyers and sellers in significant ways, but most of the time it is out of their control. I often counsel buyers and sellers to expect the possibility of an extension and to remain flexible throughout the transaction.
There are many reasons why a closing can be delayed, and it would be impossible to list every scenario. Here are a few common examples:
Delays with the buyer’s loan. We often see appraisals taking longer than anticipated, low appraisals, delays with underwriting, or issues with the mandatory Closing Disclosure that the buyer is required to receive and sign at least three days before closing can occur.
Agreed-upon repairs not being completed on time. Sellers may find it difficult to locate contractors who can schedule and complete the required work before the original closing date.
Buyers’ and sellers’ schedules. As the closing agent schedules signing appointments, work schedules and other commitments may require the closing date to be moved a day or two so all parties can sign the documents.
Delays with the mail. When one of the parties to the transaction lives outside the area and original signatures are required, the closing documents must be overnighted back to the closing agent. If this is done at the last minute, it can easily cause a delay.
Title defects. Some title defects found on the title report require additional time to resolve. These may include issues involving ownership, probate, liens, encroachments, boundary disputes, legal access, or tracking down missing fulfillment deeds or full reconveyances for previous mortgages. Some of these issues can require a significant amount of time to resolve or even a quiet title action through the court system.
Buyers and sellers should understand that a closing date is never truly set in stone. It may need to be extended several times before the transaction is finally completed. Becoming upset with one another rarely improves the situation. Walking away from a transaction simply because the buyer’s lender missed the closing date is often shortsighted, especially when starting over with a new buyer could take much longer. I have seen closings delayed for several months beyond the original target date. In these situations, patience truly is a virtue. If you understand from the beginning that delays are always a possibility, you may find the process much less frustrating.