Your real estate agent calls you and gives you the great news, your offer has been accepted!
Now what? Buyers often ask, why from acceptance does it take so long to actually close? Generally a real estate closing takes 60 days from offer acceptance to closing. There are many “cooks in the kitchen” who play an extremely important part behind the scenes in actually getting the transaction closed!
Inspectors, attorneys, insurance companies, appraisers, underwriters, surveyors and title companies are a handful of important professionals who play a vital role in getting you from accepted offer to the closing table! Below is an overview of what these professionals do and why it takes approximately 60 days to close from offer acceptance.
Most buyers will make their purchase offer contingent on various inspections and/or tests. They have the right (or not) to perform many different types of inspections or tests, including (but not limited to) a home inspection, radon test, pest inspection, lead paint inspection, and septic inspection.
Once the buyers offer is accepted, they will have a set amount of days to perform the inspections or tests. The majority of inspections or tests are at the buyers own expense since they are the ones that need to be satisfied with the results! Once the inspections or tests are completed, the buyer has the option to remove the contingencies of the inspection(s) “clean” with no conditions OR they have the option to ask the seller to have specific work and/or repairs done prior to closing. Buyers are encouraged to look into different inspection companies and should make sure that the company they select will provide them with a detailed (we love pictures), easy to understand, and neat report. Having a detailed report can be the difference in a seller agreeing to repair or fix valid requests from a buyer.
Mortgage (Loan) Officers/Originators
Mortgage (loan) officers are often the first point of contact for buyers in their pursuit of home ownership (other than maybe a real estate agent). They are generally the first professional a buyer will see once they’ve had their offer accepted.
When a buyer meets to apply for their mortgage can vary depending on the situation – before, during, or after the inspection process. Within their accepted offer, there will be a date for the bank to issue their mortgage commitment to the buyer. A good lender on average should take 30 days from acceptance to issue the buyers mortgage commitment. The processor, underwriter, and appraiser also play an important part in the buyer obtaining a written mortgage commitment.
Once the loan officer meets with the buyer for application, the file is assigned to a mortgage processor. The mortgage processors job is to ensure all of the information in the package is correct and verified. At this point the loan officer will often “pass the torch” to the processor and they will be the main point of contact for the buyer from this point forward.
The mortgage underwriter normally will have final approval and final responsibility to approve the buyer’s loan. They check to make sure the loan is within loan guidelines and also make sure that the tax, title, insurance, and closing documentation is in place. Once they give the “clear to close” the ball is now in the attorney’s “court” to set a closing date and time.
When applying for their mortgage, a buyer will also bring payment for a bank appraisal. There are two main reasons for a bank appraisal to be completed. First, the appraiser is going to give their point of view on the fair market value of the home to make sure the value supports the purchase price. In addition, they are looking for major safety issues with the subject property, such as, peeling paint, broken windows, or missing handrails. If the appraiser cites any issues, they must be completed and reinspected prior to the loan being cleared to close. Depending on the mortgage type (i.e. FHA, VA, Conventional) the appraiser has certain requirements to adhere to.
There are three attorneys (bank attorney, buyers attorney, sellers attorney) that play a role in getting an accepted offer to the closing table. In most cases, the accepted offer will be contingent upon the review and approval of the buyers and sellers approval within a set amount of days from acceptance. From this point, the sellers attorney will have the abstract updated, a title search done and review it for problems, cure the problems (if applicable), get the discharges of any mortgages, prepare the deeds, and order the instrument survey. These documents will be sent to the buyers attorney for their review on behalf of their client, the buyer. Once the bank gives the “clear to close” the banks attorney, buyers attorney, and sellers attorney will coordinate the closing date and time.
A survey is required to be completed for the subject property when transferring of ownership. The seller typically pays for this and the cost is normally around $500.00 (depending on other factors). The sellers attorney will usually wait until the buyer has obtained mortgage commitment before they order the survey. This ensures the seller doesn’t pay for the survey just to find out the buyers mortgage is declined. Once the surveyor completes their map, they provide it to the attorney for review. In the buyers commitment there will be the “certifications” needed for the survey. Should there be any encroachments on the neighboring properties, a boundary line affidavit will be generated and signed off by all effected parties.
Once a buyer and seller agree to terms, the title company plays a large part. Title companies are often tasked with searching the history of title for defects or “clouds.” This could include (but not limited to) other claims on the property in the form of liens or easements. Most mortgage lenders will require a title search prior to approving the buyers loan. The title company also offers an optional title insurance to a buyer against past/future fraudulent claims to ownership.
Depending on the percentage of loan to value, the lender will require the buyer to obtain home owners insurance prior to them clearing the file to close. The buyers lender and attorney will require an “insurance binder” be sent to them showing payment and proof of insurance. There are many insurance companies and it’s suggested that a buyer shop around for different quotes since each companies quote can be different.
The above professionals are extremely important to most real estate transactions. If the above professionals do not do their jobs in a timely fashion this can delay a closing, which can be frustrating to a buyer and seller! An experienced real estate agent should be able to keep all parties working towards the common goal, getting the deal closed in a timely fashion!
About the authors: The above information was provided by the Keith Hiscock Sold Team (Keith & Kyle Hiscock). With almost 30 years combined experience, if you’re thinking of selling or buying, we’d love to share our knowledge and expertise.
We service the following Greater Rochester NY areas: Irondequoit, Webster, Penfield, Pittsford, Fairport, Brighton, Greece, Gates, Hilton, Brockport, Mendon, Henrietta, Perinton, Churchville, Scottsville, East Rochester, Rush, Honeoye Falls, Chili, and Victor NY.
Visit our website at www.HiscockHomes.com.
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