Do you know how long it really takes to buy a home?
The process for buying a home takes some time. When you buy a house, you may be able to close on the deal in a few days if you have no contingencies and cash. Most people do not buy houses with cash, and most people want to make sure the home they are buying is in decent shape. It can take 30 to 60 days to complete the home buying process for most buyers. I would say on average it takes about 45 days to close on a home in Colorado, because we are seeing delays caused by slow appraisals. Every state has a slightly different timeline for how long it takes to complete the sale on a home based on appraisers and the local process.
What is the fastest way to buy a home?
Even if a buyer has cash and is ready to buy a house today, it takes time to close a deal. The buyer will want to make sure they get clear title to the house, which requires a title company or attorney to provide title insurance. The quickest title insurance can be obtained is usually a couple of days. A closing time must be set up and if there is a loan on the property then a payoff must be ordered from the bank (if the seller has a loan). In reality it takes at least a week to close on a property using cash and no contingencies.
How long do contract contingencies add to the time frame to buy a house?
When I buy houses, I often remove all contingencies except for clear title. Clear title will make sure I am not buying a house with a $100,000 judgment that I did not know about. I am a very savvy buyer and have been buying houses professionally for the last 15 years. Most buyers will want to perform an inspection, will have appraisal contingencies, and loan contingencies.
Inspection contingencies can range in time from 3 days to 20 days. Most of the inspection contingencies I see are from 7 to 14 days. The shorter the inspection, the better for the seller because if there is a problem they will not waste time before they can put the home back on the market. One way for a buyer to make their offer more appealing to the seller is to shorten the inspection period. Once the inspection contingency period is over, there may be additional time needed to negotiate any problems discovered during the inspection. If you need an inspection, the quickest you can buy a house would be about two weeks.
How long can it take to buy a home when a loan is involved?
The biggest delay in buying a house, is getting a loan. A few years ago we saw loans closing in less than 30 days, but things have changed greatly in Colorado and across the country. New laws were put in place that required more disclosures from lenders, which takes more time. This was meant to protect consumers, but added delays to the house buying process. If a buyer is getting a loan, it almost always takes at least 35 days to close, and in some areas where there is a shortage of appraisers it is even longer.
A loan takes so long because the lender has to verify all the buyers' information. When a buyer gets qualified for a loan, they give basic information to the lender and their credit is pulled, but the lender does not verify all the details. When the buyer has a contract accepted on a house, the lender checks out everything in the buyer's financial history to make sure they are making what they say they make and they have no hidden debt. The lender also checks the buyer's credit again, and makes sure the buyer did not change anything financially since they first qualified for the loan. All of this verification can take from two to four weeks depending on the lender and the type of the loan they are getting. If the buyer is using some sort of down payment assistance program, the process can take longer, because the entity giving that down payment assistance will want to verify all of the buyer's information as well.
How can you shorten the time it takes to buy a house?
In Colorado it is taking from 3 weeks to 4 weeks to get an appraisal done and sometimes longer for properties that are outside of the main towns. It is vitally important that once a contract is accepted on a house, the lender orders the appraisal as soon as possible. If the lender waits a week or two, the process may take two months! How quickly an appraisal can be done varies depending on the area you are in. In some parts of the country it may only take a couple of days, but in areas like Portland it may take two months to get an appraisal completed.
The time it takes to buy a house also varies in different states based on local practices. In New York, real estate transactions are closed with an attorney. The contract process is also different from most states and it can takes months to close on a deal even when everything goes perfect. Make sure you ask your lender or real estate agent how the process works in your area and how long you should expect it to take.
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