Whether you are buying your first home or selling your current home, there are many different elements to keep track of to ensure that nothing is missed. While there are several important elements to track, the closing date is one of the most important. The closing date is best defined as the date the seller agrees to transfer the ownership of their home to the buyer. While closing dates can be flexible depending on the circumstances, it is crucial to understand that closing dates can change due to a variety of reasons. As experts in real estate and conveyancing, the team at Sidhu & Associates understands how complex the buying and selling process can be, especially if the closing date changes. That is why we have compiled some information on closing dates and the main reasons they can change to help you prepare for the unexpected.
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4 Common Causes for Changing Closing Dates
While closing dates are often treated as though they are set in stone, the reality is that they can be easily changed. The following reasons are some of the most common causes for a change in closing date:
1. Financing/Mortgage Rejection
The buyer could be rejected for their mortgage before closing even if they were pre-qualified. This rejection can occur for several reasons, but they will all result in postponing the closing date. While a new mortgage can be obtained in rare cases, the seller will often need to seek a new buyer.
2. Unrealistic Deadlines
A purchase offer will typically set the approximate deadlines for closing, possession, and inspection dates (if requested). In some cases, these deadlines may not provide enough time to secure financing, complete an inspection, and perform other tasks. If the buyer is not able to complete all required tasks to remove subjects, they can work with the seller to change the closing date, but the seller is under no obligation to do so. That said, it is often encouraged for the seller to work with the buyer to find an agreement that works well for both parties.
3. Appraisal Issues
A lender will often require a property to be appraised before they agree to advance the funds for a mortgage. While the buyer and seller will agree on a price, the purchase cannot be closed until the appraiser has done their part. In most cases, the buyer will not be able to borrow more than a certain percentage of the value of the property based on the value determined by the appraisal. If the purchase price is deemed to be too high, the mortgage may not be approved, and the closing dates will need to change as a new agreement will be needed.
4. Incomplete Repairs
An initial walkthrough of the home or a detailed home inspection may reveal defects that affect the value or safety of the property. A buyer could request repairs to be completed, making the purchase contingent on those improvements. When repairs are agreed to by the seller, the pre-closing preparations can typically go forward so long as the repairs are completed before the closing date. If they are not completed in time, the closing date may need to be delayed.
To learn more about closing dates or to learn about how we can help with your real estate transaction, get in touch with the team at Sidhu & Associates. We can be reached through our online contact form and will be happy to answer any questions you may have.
