How Long Does it Take to Close on a House?
How Many Days Does a Typical Real Estate Transaction Take?
You just got your purchase offer accepted today. How long does it take before you have the keys? This depends on 3 factors: market conditions, financing, & your personal preferences.
Market Conditions:
Let’s start with market conditions. In a SELLER’S market there is more demand than supply. This typically leads to having multiple offers on one property. How do you make your offer standout? You offer a competitive price AND you have your Realtor find out which contract conditions the seller prefers. Here are a few examples of possible seller preferences and solutions. The sellers want to close as quickly as possible. Your Realtor should then call your loan officer and determine the fastest date they can accomplish. Then they should have a conversation with you to see if you can accommodate that timeline. Then you use that date in the purchase agreement. The seller wants to close after their kids' school year ends in two months. Your agent should check with you if an extended 2-month period would work and if it does, write that as the closing date. As a reminder, purchase contracts and agreements between buyers and sellers can be as creative and flexible as they need to be. I’ve seen it where we close and the occupancy isn’t till a few days after. I’ve also seen it where occupancy occurs before the closing date.
Financing:
What are your options for financing a home purchase? You can use cash. You can use a variety of loan products including FHA, Conventional, VA, and more. You can also do seller’s financing which is when the seller obtains the loan and you work out a payment plan directly with them. You can also do lease-to-own which is when you are leasing the property from the seller but they are slowly allowing those rent payments to go toward your ownership of the property. How does financing impact the transaction timeline? Every financing option has different criteria that have to be met that require different amounts of time. Here are some examples: Cash allows you to close the fastest and you are not required to perform an inspection or appraisal. Seller financing can sometimes move faster than traditional loan products because you are working directly with the seller instead of working with a financial institution. Different loan officers and mortgage brokers process the same loan product at different speeds. You might have to shop around to find the one that is going to be able to accomplish the timeline you need.
Personal Preferences:
I cannot stress this enough, there is no “right” or “wrong” way to determine the timeline from the “pending” to closing. Your personal preferences are a large factor in picking your closing date. When does your lease end? Will you be able to afford paying both your rent payment and your first mortgage payment if there is a crossover? Do you have another property that you have to sell before you can buy your new home? Does your interest rate lock end on a specific date? That would mean that closing by that deadline would save you thousands of dollars over the course of the loan. These are all personal preferences that are going to help determine how long it takes to close on a house. I hope this was helpful in trying to understand the homebuying process. If you want to continue learning more about the housing market give me a follow on Hodge Homes or sign up for my monthly newsletter so you don’t miss a beat!
Love, Gabrielle
