Mike's Take - The Closing Date

"Hitting the Bullseye"

Our team member Mike Grover has been a Realtor for over twenty years. We asked to him write a blog about "The Closing Date", a term often misunderstood by sellers and buyers alike. 

"The closing date is defined on the sales agreement as the day when the deed is recorded in the name of the purchasers and the sellers receive their money.  But how is this date chosen, and what happens to cause the date to be moved?
 
Closing used to commonly take 60 days, and it wasn’t unusual to hit 90 days in some cases.  But then, as the whole real estate transaction started to move online, this moved to 30 days.  Because of various state regulations, it will occasionally rise to 45 days, but then as everyone gets used to the new regulations it moves back down to 30 days.
 
When a sales agreement is written, the selling realtor fills in the closing date based on their experience with other closings, and their knowledge of the buyer and the house being purchased.  In reality, the realtor is just guessing.  They have pinned a target date to the wall and invited all parties to the transaction to work together to try to hit the bullseye. 
 
There are many things that can cause closing to be delayed.  Mismanaged paperwork, repair negotiations, the scheduling of bids, repairs, inspections, and appraisals are common items.  But other things can impinge, for example, sometimes (rare, but it happens) an underwriter will intervene in the transaction and insist on a repair being done.  I once had a closing delayed because the mortgage insurance underwriter was sick, and the file was on her desk, and so closing was delayed by one day.  Or, sometimes a courier cannot be scheduled in a timely manner so closing is delayed by a day.  
 
Sometimes closing will be delayed by the buyer or the seller for their own personal reasons, which are withheld from the other party.  On these occasions the buyer or seller works behind the scenes with the lender, title company, or even one of the realtors to delay closing.  Closing can also be early, but it rarely happens because of moving considerations by both parties.
 
Real estate transactions must close by the closing date or the transaction is dead.  However, if all parties agree to extend, the date can be changed, but it must be changed in writing and signed by all parties. 
 
Usually it is the buyer who needs more time.  A seller can refuse to extend the closing date, but sellers want to sell, so it is not unusual for a seller to extend the closing date for additional time if the buyer has a good reason and seems ready and able to close.  If there are doubts about the need for extra time the listing agent may ask for non refundable earnest money, or have the earnest money immediately released to the seller.

I have seen sellers ask for delayed closing, usually because of problems with the house they are moving into.  In those cases the buyers have little recourse but to give the time, terminate the transaction, or threaten legal action.