Survey: Delays to Closings Are Few and Far Between

Signing a formal documentIt’s a predictable worry among homebuyers: What if there’s a problem at the closing that torpedoes the sales contract?

But worries and reality are two different things. In fact, a recent survey of real estate professionals by the National Association of Realtors found that 90 percent of all sales contracts closed successfully.

Nearly two-thirds of all contracts (64 percent) closed on time with no problems whatsoever, the survey found. An additional 26 percent were delayed but eventually went into settlement. The share of contracts that closed on time has remained roughly the same since the NAR first asked the question in January.

Taking a look at problems that arose at or near the closing, 12 percent of real estate professionals identified a financing issue, 8 percent reported home-inspection problems, and 7 percent had problems with an appraisal. Other often-seen problems involved distressed properties and titles or deeds (3 percent each), and insurance and buyers losing their jobs (1 percent each).

“It is surprising that in a ‘tight’ and ‘difficult’ credit environment, only 12 percent of contracts that were reported to have settled or terminated had financing issues,” NAR economists wrote in their report. “One explanation may be that potential homebuyers are deciding to sit on the sidelines for now, so these buyers were not captured in the data.”

Closings should become easier and more transparent when new federal regulations take effect in August. The new mortgage guidelines, written by the Consumer Financial Protection Bureau, are intended to give borrowers more time to ask questions and compare costs.

Among the changes, lenders will no longer be able to make last-minute changes to closing documents — such as imposing a higher interest rate, changing the loan product, or adding a prepayment penalty to the loan. The regulations specify that homebuyers must receive any new disclosures at least three business days before the closing.

(Image: Flickr/Juli)

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