Chris Hounchell REALTOR

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Award-winning Florida real estate Broker PROUDLY SELLING IN PINELLAS, HILLSBOROUGH, PASCO, MANATEE & SARASOTA COUNTIES since 2004.

Most Common Reasons Closing Is Delayed

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You’ve signed your real estate contract that included a specific date for closing. You’ll meet all the parties at the closing table on that date, right? Wrong…maybe. The closing date agreed upon in the real estate contract is tentative until the mortgage company and title company/attorney confirm it. There are times when that date may come and go without an end in sight. Why is that? Below we’ll examine the most common reasons closing is delayed.

Most-Common-Reasons-Closing-Is-Delayed

  • The mortgage company hasn’t completed their underwriting. After the mortgage crash in 2008, lenders became much more strict in their underwriting guidelines. Buyers are now required to provide solid proof of employment, cash flow, debt information, and savings. Once the mortgage underwriters receive all of this information they need to complete their own verification process which can take time and if changes in the Buyer’s credit report or bank statements take place it may cause the underwriting process to start all over. The mortgage company will also require an appraisal and most likely a home inspection report. If the appraisal comes back lower that the agreed upon price the mortgage company will require a lower sales price or not the loan. If the home inspection report lists repairs are needed the mortgage company may not agree to lend the money until the repairs are made and reinspected.
  • There are issues with the chain of title. Running concurrently with the mortgage underwriting process, the title company is underwriting the title to the house. They are responsible for issuing a clear title to the Buyer, which means they need to account for the mortgage(s) being paid off at closing, ensure taxes are current (or will be paid at closing), and the owners listed on title are the same owners attempting to sell the property. Issues arise when a prior mortgage still shows of record, the chain of owners is incomplete or incorrect, the legal description to the property is incorrect, or any other questionable information that is discovered in their research of the public records. Because the contract states that the Seller will provide a clear title to the Buyers at closing, closing cannot take place until all issues are resolved and depending on the issue will dictate how substantial the delay may be.
  • Communication between all parties is lacking. All of the parties (or their representatives) need to communicate throughout the process. The mortgage company may have a last minute requirements they need the Buyer or title company to fulfill or the title company may not have availability for the closing date or time originally requested. Simple issues can turn into big headaches if communication breaks down.
  • The Buyer or Seller runs into money troubles. It takes a lot of cash to buy a home and even if the Buyer is mortgaging the property he or she will still need to bring money to the closing table. Many Buyers rely on the funds from the previous home to fund their new home. If the previous home doesn’t close by the time their home is they will most likely won’t have the funds readily available to close. On the flip side, if the Seller was expecting to simply break even on the property they may need to scramble to find available funds to cover any unexpected costs.
  • The final walk-through uncovers new problems. Sometime within 24 hours of closing, the Buyer and Seller (along with their agents) will complete the walk-through and sometimes it can unveil issues that were either hiding during the showings and inspection (holes in the walls, stains/rips in the carpet or gouges in the flooring) or the Sellers did a less than stellar job when they moved out leaving behind garbage or a house that’s in less than “broom swept” condition. If the Realtors and their clients cannot come to a quick resolution to the issues it can result in a postponed closing.

So what should you do if you’re closing is subject to a delay? First, stay calm. What’s done is done, there’s no point focusing on what should have been done only what can be done now. Try to respond to any requests from the lender or title company immediately and keep in touch with your Realtor and/or attorney throughout the entire process. If a situation arises that requires additional negotiation for a repair or credit at closing attempt to find some middle ground with the other party that will resolve the issue quickly and keep the ball rolling towards the goal of a closed and completed transaction.

Seller’s Closing Checklist

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You’ve found a buyer for your house and the contract is signed. Congratulations! You may find yourself looking around and wondering “now what?” We have the answers you’ll need to get from contract to closing table. Follow our Seller’s Closing Checklist for a guided and smooth closing process.

Seller's-Closing-Checklist

After Signing the Contract

  • Provide the name of the mortgage company(ies) and account number(s) to the closing agent/title company so they can obtain the necessary payoff information.
  • Notify the HOA or Condo association of the tentative closing date and if there any processing fees to change their owner records and obtain copies of the bylaws.
  • Schedule the survey.
  • Schedule the home inspection with Buyer’s agent.
  • Schedule  the occupancy inspection with local municipality.

Four Weeks Before Closing

  • Schedule movers or make moving truck reservations.
  • Begin packing.
  • Make repairs agreed upon during the home inspection process.

Two Weeks Before Closing

  • Contact utility companies and arrange final readings and provide a forwarding address for the final bill.
  • Request a change of address with USPS.
  • Cancel or transfer reoccurring services (cable, pest control, landscapers, etc.).

One Week Before Closing

  • Confirm closing date and time.
  • Schedule Buyer’s final walk through.
  • Complete packing.
  • Clean the house.

Day Before Closing

  • Review preliminary HUD-1 settlement statement.
  • Provide final utility readings to the closing agent/title company.
  • Complete final walk through with Buyer.

Day of Closing

  • Empty the house of your belongings.
  • Complete one last sweep of the house, making sure to check all cabinets, closets, and drawers.
  • All titled owners to the house need to attend closing.
  • Provide keys, garage door remotes, and any other pertinent information to the Buyer.
  • Once closing is complete, cancel or transfer your homeowner’s insurance.

Take a look at our moving timeline as well!

Breakdown: Closing Costs Explained

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The day has come…it’s time to close on your home. It doesn’t matter if you’re the Seller or the Buyer; a real estate closing isn’t cheap.Sold   When you sit down at the closing table you’ll review and be asked to sign a HUD-1 Settlement Statement. This document itemizes every single charge and fee involved in the transaction and identifies who is paying for what. It can be overwhelming to see all those numbers and line item description. Below we’ve broken down the most common closing costs and fees you’ll see.

Commission (Seller)

Realtors earn their pay only when a property transfers owners at settlement. The amount of commission is calculated based on a rate previously negotiated by the Seller when the property was listed (usually 6% of the sales price).

Mortgage Fees (Buyer)

Mortgage fees vary widely from lender to lender. The most common charges you’ll see are “appraisal fee”, “credit report”, “processing fee”, and “origination fee or charge”.

In addition to these fees, there are certain monies the lender will require up front including the daily interest due on the loan from the day of closing to the end of the month, mortgage insurance premium for one year (if your down payment is less than 20% of the mortgage), homeowner’s and flood insurance premiums for one year and property taxes. If your mortgage includes an escrow account for taxes and insurance, the lender will require you make deposits into the escrow account at closing.

Title Insurance (Seller & Buyer)

Next to the mortgage, title insurance is such a crucial part of a real estate transaction. Title insurance protects the buyer’s ownership position (and the mortgage company’s lien position) in the chain of title (ownership). If a previous owner was to come back and try to claim the property was still theirs or a prior mortgage company claims their lien was not paid in full, the title insurance underwriter would defend, and in some instances pay out, on any loss you may experience.

It takes a lot of work to issue a clear title at closing that’s why you’ll see charges on your settlement statement labeled “owner’s title policy”, “lender’s policy”, “title exam/abstract fee” and “settlement fee”. Additional fees can be added if the property in located in a Condominium or Planned Unit Development and additional endorsements are needed for the insurance policy.

Recording Fees (Seller & Buyer)

After the Sellers have signed the Deed and the Buyers have signed the Mortgage, the title company will send the documents to the County Clerk’s office to have the documents recorded in the public record. This helps protect the integrity of the chain of title. Each County Clerk sets their own fee schedules so fees can vary county to county.

In addition to recording fees, the State’s Department of Revenue levies a Documentary Stamp Tax on Deeds and Mortgages, among other documents. The rate for Deeds is seventy cents ($0.70) per every $100 of the transaction and thirty-five cents ($0.35) per every $100 of the value of the mortgage. The title company is responsible for collecting these monies at closing and delivering them to the County Clerk at the time of recording. The Clerk will then submit the monies to the Department of Revenue.

Miscellaneous Fees (Seller & Buyer)

The title company and any third party vendors involved in the sale of the property will want to be reimbursed for charges they advanced to get the transaction to the table. These charges can include overnight fees, tax research service fees, survey, wire fees, notary fees, and flood zone research.

Each transaction is different but these are the most common items you will see on the settlement statement.  If you have a question about a fee or charge, speak up and ask for an explanation before you sign.