The standard real estate contract for the state of California includes a clause that says, “Time is of the Essence.” Essentially, this means that the parties to the contract need to perform according to the timelines laid out in the contract or they could otherwise be in breach of the contract.
It appears to me that a lot of buyers, and many agents, seem to totally ignore this clause. It is pretty common for most escrows to be delayed 1-2 weeks or more. It is also common for buyers to be unprepared to remove their contingencies when they are due.
Why does this happen? There are countless excuses out there: loans are tough these days, had to go on vacation, work, holidays, etc. But here’s the bottom line: if a buyer really pushes to get their deal done, it can be done in the allotted time. Many times it can be done sooner!!
The number one reason for the delays is the buyer’s loan. And the main things that delay the loan are buyers not getting their requested documents/paperwork back to the lender in a timely manner (like 12-24 hrs) and the lender not getting the appraisal ordered in time. If these two things are done the first week, it is pretty much a certainty that the escrow will close on time.
Why is this important?
Besides the buyer not doing what they agreed to do, it could potentially put the buyer in a position of liability. There’s a risk they could lose the property and maybe even their deposit if contingencies have been removed.
My recommendation: have your ducks in a row before you go into contract to purchase a home. Talk with a lender prior to shopping for a home and get them all the documentation they need up front. If they need something during the escrow, turn it around the same day. Be in constant contact, every couple days or so, with your agent and lender. And be sure the appraisal is ordered within the first few days after contract acceptance.
Buying a home is serious business. The contracts involved require your attention. Be sure to give it the time and respect it deserves.
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