Why Does Escrow Take 30-Days To Close?

Podcast:

Hi, I’m Sue Bonzell with Terra Firma Global Partners and a lot of people ask me, “Why does it take 30 days to close an escrow? Why 30 days?”

Well, if you’ve got cash, we can close it in 10 or 15 days. We love cash, cash is king. But typically, if you’ve got a loan, you’re going to need about 30 days. Usually 15 to 17 days, maybe a little bit more to do all of your inspections. You definitely want to do your inspections. We highly recommend that you do your due diligence, you find out everything that you can find out about the property, the area it’s located, any rules and regulations for the area. Everything you can find out about the home itself. Your pest inspection, your home inspection, roof inspections, all those kind of things. You want to know everything you can find out about this property and it takes time to do that. A lot of times those inspectors are very busy, you can’t get them right away. So you need that time to book them, get them in there, and give them time to get those reports back to you.

At the same time, once you get those reports, there may be some negotiations that have to be done in between that time. So you need a little bit of time to do some negotiations. Now, if you do some negotiations and say you ask for a credit. Well, what happens is if you have a loan, now if you’ve got a credit and it changes something on all those loan documents, there’s going to be some extra time. This is a new disclosure law. So, you’re going to have an extra couple of days where there’s some paperwork in between, they have to wait a certain amount of days to make sure that everybody is clear on what’s happening, and that there is a change.

The other remaining time is pretty much about getting that loan funded. And there is a ton of paperwork. I’m so glad I’m not a lender. I do enough paperwork with real estate and I know it’s a lot, but it’s all necessary and we need the time to do it. So, that 30 days really is necessary to close on a home, or close an escrow on a home with a loan. So you’re looking at about 30 days, sometimes more, sometimes a little less. But if you’ve got the cash, go ahead and bring it. We’ll take it right now.

I’m Sue Bonzell, with Terra Firma Global Partners in Sebastopol, CA.

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