Closing Fast! What Are The Hold-ups? Different Speeds For Different Loan Types
FURIOUS AGENT SCREAMS AT ME
A furious agent called me a few months ago, screaming vitriol because we were closing his transaction one day late.
He was livid because we promised we could close in 14 days, and the late closing was causing “enormous hardship for both the buyers and sellers.”
The problem was that we had nothing to do with the late closing.
It was 100% on escrow, as we had been waiting for over a week, despite our begging and pleading, for a necessary document that should have been provided in a day or two at most.
WHY WE OFFER FAST CLOSES
We always try to close as quickly as humanly possible to make our clients’ offers more compelling than other offers, particularly cash offers.
We also offer a “Close On-Time Guarantee” to make offers more compelling.
But the issues we face are the hold-ups from third parties over whom we have no control.
I want to touch on some of these issues today.
- ESCROW. To close quickly, lenders need prelims, exact fees, and all other necessary documents in hours or a day at most. For some reason though, some escrow companies refuse to move quickly, making it impossible for us to close quickly. Hence, if agents want to close fast, they need to make sure their preferred escrow officer is on board – with guaranteed turn-times of 8 to 24 hours (at most).
- APPRAISALS. This is our biggest issue right now, as appraisers remain slammed and we need appraisals back in three to four days if we want to close in 14 days. Even though we offer massive “rush fees” (up to $500 – that we cover), we sometimes cannot find an appraiser who can commit to our turn-time request. This is particularly the case for unusual properties (in-law unit, rural, mixed-use, etc.) or for areas where the appraiser shortage is acute. We sometimes get quoted two to three WEEK turn-times for some of our rural Texas properties, for example. This is why we ask agents to share MLS listings with us before making a “fast close” offer on a property that is even slightly unusual. Agents also need to be sure that appraisers can get access to the property as soon as humanly possible.
- APPRAISAL REVIEWS. This is one of the reasons why we can’t close jumbo deals in under 21 days, as almost every jumbo investor requires an appraisal review. Reviews can’t be done until the appraisal comes in, and they can take anywhere from three to five business days themselves on occasion.
- HOAs. Every condo purchase requires specific documents and info from the homeowners’ association (HOA), and these HOAs often take their own sweet time, despite our begging, pleading and yes, bribing (for speed). This is why we don’t offer closes faster than 21 days for condos.
- OPTION PERIODS. In Texas, every offer comes with an “option period” (where buyers can back out of a contract for any reason), as our Texas agents obviously know. We, however, usually cannot start our “fast close” countdown until the option period ends, as we are unable to order the appraisal and perform other tasks until the period ends.
- BORROWERS. Borrowers are often shockingly lackadaisical too, despite our pleas and prodding. We need loan terms disclosures back in a few hours at most, and updated documents and conditions requests back in a day at most – if we want to close quickly. Borrowers also need to be ready to sign loan documents at a moment’s notice.
- SECOND SIGNATURES. Sometimes we need a second signature or an additional underwrite from an investor that we need to sell the loan to. This is often the case for large loan amounts (over $2 million) and/or for very unusual transactions. These second underwrites can often add two weeks to closing periods, depending on how backed up the investor is.
- MULTIPLE PARTIES. Every transaction has far more going on behind the scenes than most people can possibly realize, involving the following parties: Selling Agent, Listing Agent, Escrow Officer, Escrow Assistant, Title Officer, and the Appraiser. On the JVM side, we have the Mortgage Analyst (to update the file and lock the loan), the Closing Specialist (to process the file), the Appraisal Manager, the Disclosure Specialist, the Third Party Verification Specialists, the Underwriter, the Doc Drawer, and the Funder, among others. Our Closing Specialists have the very unenviable job of trying to coordinate ALL of those parties and making sure they perform in a timely manner. Most of the time, they succeed amazingly well. But if just one of those parties is delayed, everyone else is delayed too.
FASTEST CLOSING PERIOD BY LOAN TYPE
- CONFORMING LOAN: 14 to 21 days, depending on property type, and borrower employment (complex self-employed borrowers require more time).
- FHA LOAN: 14 to 21 days, depending on property type, and borrower employment (complex self-employed borrowers require more time).
- JUMBO LOAN: 21 to 25 days, depending on property type, investor, loan amount, and borrower employment.
- VA LOAN: 30 days, as we have to wait for VA certified appraisers who have up to ten business days to return appraisals. VA appraisals also require formal underwriter reviews, requiring additional time.
- NON-QM LOAN: 30 days, as non-QM investors like to do their own underwrites and they tend to be slower in general.
Founder/Broker | JVM Lending
(855) 855-4491 | DRE# 1197176, NMLS# 310167