Tips for On-Time Real Estate Closings

Standard Real Estate Closing Timelines

In real estate, the timeline to reach the closing table varies based on the type of transaction. For both cash and financed deals, a standard title search, examination, and commitment to issue title insurance generally take about a week, provided there are no significant title issues.

Cash deals are typically the quickest, and can generally close as soon as there is a clear title. The simplicity of these transactions—without the need for loan approval—allows for a faster process. Buyers paying with cash often prefer a speedy transaction and, because they’re often purchasing properties “as-is”, there are few hindrances to that speed.

For financed deals, the timeline extends to 25-45 days. Once the title is clear and the title commitment is prepared, the lender must assemble the loan package. This step can introduce variability in the closing timeline, as it depends on several factors including appraisals, inspections, and other steps that are required to submit a complete loan package.

Factors that Impact Closing Timelines

While you can expect to close in around a week for most cash transactions and in three to six weeks for most financed transactions, several factors can impact these closing timelines.

The Property Location

The location of the property can significantly affect the closing timeline. In some counties, you may need to physically visit the courthouse to search for documents, which can add considerable time to the process.

Elizabeth Cusimano, Escrow Officer at South Oak in Birmingham, says, “In Jefferson and Shelby County in Alabama, public records are online, and it’s much easier to perform the title search. However, in other counties without digital records, the process can take up to two or three weeks, as it involves manually retrieving documents from the courthouse to complete the title search and exam.”

Title Issues

Title issues are another common factor that can delay closing. Any problems with the title must be resolved before the transaction can proceed. “Sometimes we will be in the middle of the title search and exam and discover that one of the sellers listed on the deed is now deceased. In some cases, all we need is a death certificate. In other cases, it’s more complicated and will take longer,” Cusimano explains.

Other common title issues include mortgages that were never released, judgments, liens, and missing heirs. The title company works diligently to resolve these issues as quickly as possible, but depending on the complexity, it can take time and potentially delay closing.

Lender or Financing Issues

When a lender is involved, the title company can only control the title aspect and prepare the closing package. Financing issues are often beyond the title company’s control, but these can also cause delays.

For example, delays can occur when the lender requires additional documentation from the buyer, such as proof of income, verification of employment, or clarification on credit report discrepancies. If the buyer is slow to provide this information, or if the lender's underwriting team takes longer than expected to review and approve the documents, the closing timeline can be significantly extended.

Your Secret Weapon for Quick Closings

While it won’t guarantee that your closing will be free of delays, a preliminary title report can significantly reduce the risk of title-related issues that impact your closing timeline. A preliminary title report is a title search and examination performed before a home goes under contract. This report identifies issues in the chain of title, encumbrances, or liens to ensure there is no cloud on the title.

By revealing these potential problems early, realtors and property owners can address them without the pressure of an impending closing date or deadline. It is especially beneficial to order a preliminary title report in situations with red flags for title issues, such as divorce, estates, trusts, tax deeds, and foreclosures.

Ordering a preliminary title report before listing a property provides several advantages. Agents can proactively address any title issues that might arise, ensuring a smoother transaction once a buyer is found. While most title issues are solvable, some resolutions require time, collaboration, and creative problem-solving. By identifying and addressing these issues early, you can prevent delays that might occur had they been discovered after the property goes under contract.

Once the property is under contract, the title company can simply perform an update to the title, searching from the time the preliminary report was completed to the current date. This update process is typically faster and incurs a nominal fee, significantly streamlining the closing process.

Other Ways to Minimize Closing Delays

While a preliminary title report is one tool that can help minimize title-related closing delays, there are other things realtors can do to ensure that closing happens as quickly as possible.

Unless they are real estate investors, most clients likely haven't closed many real estate transactions. Setting expectations, providing client education, and clear communication are crucial elements that can help you avoid closing delays.

Clarify the roles of everyone involved in the transaction. For agents, determine who will order essential documents like the termite letter and the home warranty. For clients, outline their responsibilities, such as ordering the payoff and providing necessary documentation.

Educate your clients about the importance of maintaining their financial stability during the closing process. Remind them to avoid any activities that could impact their credit or loan approval. This includes changing jobs, altering marital status, making large purchases, depositing large sums of money, changing their debt levels, or forgetting to pay bills.

Learn as much as you can about your client and be on the lookout for potential red flags. For instance, if you discover that your client is selling a home inherited from a deceased relative but there are other siblings involved, address these issues promptly. Similarly, if your clients are in the process of divorcing but are not yet divorced, this could complicate the sale. Assess whether there might be a need for a Power of Attorney if one of the parties cannot be present at closing.

In all of these situations, regular and clear communication with the title company is essential. Keep them informed about any developments and ask questions whenever there is uncertainty.

When Closing Delays are Unavoidable

While the title company will do everything in its power to avoid delays to closing, sometimes these delays are unavoidable. Cusimano says, “As soon as substantial title problems are identified, we will communicate these to the clients promptly. While we cannot provide legal advice, we can offer detailed information about the issues, allowing clients to take the necessary steps to resolve them.”

Often, clients may need to handle the resolution themselves or seek help from attorneys who can address legal complexities beyond the title company’s capabilities. “If it’s an issue that we can fix, our goal is to be as responsive and transparent as possible,” Cusimano continues.

To ensure a speedy closing without delays, communication is key! Agents act as the bridge between clients and the title company. The more information the title company has upfront, the better equipped they are to assist you.

South Oak Title and Closing is dedicated to clear, open communication and partners with agents and their clients to provide a stress-free, enjoyable closing experience while minimizing delays. Contact us to learn more, or order your title and schedule your closing today.