You’re offer has been accepted. As the buyer, you’re excited and want to move in as quickly as possible. As the seller, you’re ready to move on. In most parts of the country, the transaction can be finished in 30 days or less. Here in Sullivan County, closing within 45 to 60 days is considered pretty good, and closings that drag on 90 or 120 days or even longer are far too common. The lengthy closing time here is frustrating to buyers and sellers … and certainly for us Realtors. So what’s the problem?
There isn’t just one culprit. There are a lot of moving parts to a system here that has just become unnecessarily cumbersome. Compared to other parts of New York State further north, the contract process here is handled by attorneys. I actually think having attorneys represent the buyer and seller is good, but the attorney-initiated contract process here is time consuming because attorneys don’t use a standard real estate contract form. So, depending on the attorneys involved, there can be rounds of back and forth addendums and contract changes. We don’t have a legal courier service here, so contracts are often mailed back and forth, which can add days to the process. Some sellers attorneys (and contracts are initiated by the seller’s attorney) wont start the contract process until the buyer inspection is complete. And once a contract is agreed to between the attorneys, the contracts begin a long arduous journey from the buyer’s attorney to the buyers; who sign and return it to their attorney, who then sends it on to the seller’s attorney to send to the seller to sign, who returns it to their attorney, who sends a fully executed copy to the buyer’s attorney. In a transaction where both the buyer and seller are outside of Sullivan County, and where the contracts are sent by regular mail, all of this contract shuttling can take a couple of weeks. I don’t know of any attorney here who prints contracts to .pdf so they can be emailed to the parties. (Please correct me if I’m wrong on this one, so I can consider them for my recommended attorney list.)
But the fault doesn’t all lie with the attorneys. One of the first questions I ask a listing agent once we have a deal is "Is there a current survey? How old is it? Who did it?" I’m always amazed at how many listing agents don’t have the survey information, or a copy of the existing survey to forward to the buyer’s attorney to review. But whether the existing survey can be recertified or a new survey needs to be ordered has a major impact on the closing time frame.
The appraisal and mortgage underwriting system has also undergone recent changes that add time. FannieMae and FreddieMac now require that appraisers review the fully executed contract as part of the appraisal process. This means that the appraisal can’t even be ordered, for all practical purposes, until contracts are fully executed — which can be 4, 6 or 8 weeks after the parties have arrived at a deal. And some lenders are requiring more and more documentation, often at the last minute. Just last week, on a deal where the appraisal was done a month ago and we all expected to close within days, the lender required that the appraiser return to the property to do a FEMA Flood Evaluation before they’d issue the final lending commitment. This was for a house, by the way, on the top of a hill 300 feet above the Delaware River that wasn’t anywhere near a flood zone on FEMA’s flood maps!
A rural area also has some other challenges that can add time. Often a Realtor or attorney needs to get some clarification on a property from township officials. For example, the status of outstanding building permits, whether there’s a certificate of occupancy, or clarification of a subdivision application. In many of our smaller townships, town halls are only open part time and some officials you need to talk to may only work a couple of days a week. So getting an answer to a question can take a few days rather than just a few hours.
The current system is more than just irritating or inconvenient. It can actually hurt consumers. Buyers, for the most part, can’t lock their mortgage rate for longer than 60 days — and I can’t confidently say to a buyer that they can be closed within 60 days of having an accepted offer. So they wait to lock their rate and risk their rate going up. Sellers also can’t plan. They can’t sign a contract on a new house they want to move into, because they don’t know when they might close on their existing house.
Let’s get a discussion going here on how the system can become more efficient and streamlined. I don’t think that we can relaistically set a goal of a 30 day close — rural property is a more complicated than cookie-cutter suburban property where 30 day closes are common — but I think having an expectation of a closing within 45 to 60 days of an accepted offer isn’t asking too much. Every little inefficiency adds a couple of days here, a couple of days there — and all of a sudden we’re at 75 or 90 days.