When the buyer's loan, appraisal or title holds up closing

Find where it is stuck

When a closing date starts to slip, the first job is to find out which part of the deal is holding it up. Underwriting delays sit with the buyer's lender: missing documents, an updated check of income or assets, or conditions on the approval that are still open. Appraisal problems come from the lender's appraiser: a value below the price, or a report that makes the loan subject to repairs. Title problems sit on your side of the deal: an old mortgage that was never discharged, a lien, a boundary or record issue, or a document the title examiner needs.

A pre-approval letter only says how much a lender was willing to lend based on what it had seen at the time. The loan still depends on the property, the appraisal, the title and an updated review of the buyer's income and assets. Ask the buyer's agent or attorney where the file stands, whether a written commitment has been issued and which conditions remain. You do not need the buyer's personal financial documents, and a reassuring phone call is not a status update.

When the appraisal comes in low

The lender orders the appraisal, and the lender must give the buyer a copy. If the value comes in below the price, the buyer may have to bring more cash or borrow less. The federal Consumer Financial Protection Bureau advises buyers to use a low appraisal to ask for a lower price and, depending on the contract, to consider cancelling, so expect that request.

Start with the facts in the report. Errors in living area or in the number of bedrooms or bathrooms, or comparable sales that are clearly unlike your home, are worth raising. For loans secured by the buyer's principal home, federal rules allow asking the appraiser to consider additional, appropriate property information, including comparable sales, to explain the conclusion, or to correct errors. What nobody may do is push the appraiser toward a number. Your side can put recent closed sales and a dated list of improvements in writing for the buyer to raise with the lender.

If the report holds up, what happens next is a matter of contract and negotiation: the buyer covers the gap in cash, you reduce the price, you split the difference, or the buyer relies on the financing terms in the contract, if those terms allow it. If the offer included an appraisal gap clause, its wording sets how much the buyer agreed to cover. Have your attorney read the financing contingency before you answer.

Contract dates and extension requests

The P&S sets a mortgage commitment date. By then the buyer is expected to have a written loan commitment or to act under the financing clause, for example by giving notice or asking for more time in the way the contract requires. What happens if the date passes depends on the wording, so put it on your calendar next to the closing date and ask your attorney what each date means.

When the buyer asks for an extension, find out why and for how long. A lender that needs one more document is a different situation from a file with no commitment in sight. Weigh the request against your own timeline, such as a home you are buying, a move or a lease that ends. If you agree, the new commitment date and closing date go into a written amendment drafted or reviewed by the attorneys. If you do not agree, ask your attorney what your options are under the contract before the date passes.

Title delays run the other way, because delivering the title the contract promises is the seller's job. Standard P&S forms often give the seller extra time to fix a title problem and allow money from the closing to be used to pay off liens and mortgages. Get your attorney started early on payoff letters, discharges and any title questions, so they are not the reason the date moves.

Closing Disclosure, recording and keys

Federal rules require the buyer to receive the Closing Disclosure (CD) at least three business days before signing the loan. Some late changes to the loan can require a corrected disclosure and a new waiting period, and whether a particular change does is for the lender to say. If the CD goes out late, the closing date can move even when everything else is ready. You receive a disclosure or settlement statement for your own side of the sale; in a covered loan transaction, federal rules have the settlement agent provide it no later than the day of closing. Ask your attorney for a draft a few days ahead.

Loan approval, the CD, signing, the arrival of funds, recording of the deed at the Registry of Deeds and handing over the keys are separate steps. The P&S says when possession passes and in what condition, typically at closing, free of tenants unless agreed otherwise, broom clean and with the keys delivered. Hand over the keys once your attorney confirms the sale has closed, and keep your homeowner's insurance in place until then; the P&S also covers what happens if the house is damaged before closing.

Protecting your proceeds from wire fraud

Closings attract scammers who break into email accounts, watch for upcoming transactions and then send messages that look like they come from an agent, attorney or settlement agent, with new wiring instructions. Sellers are targets too, because a fake message can redirect the proceeds of the sale.

Early in the transaction, agree with your closing attorney by phone or in person how your proceeds will be paid, and write down the names and phone numbers of the people you trust. Do not send account numbers by email. If a message asks to change payment instructions, do not use the phone number or link in it; call the number you already have.

If you think money has gone to the wrong account, contact your bank or wire service right away and ask about recalling the wire, then report it to the FBI's Internet Crime Complaint Center (ic3.gov). Acting quickly can improve the chance of recovering the money, but recovery is not guaranteed.

A short checklist when closing slips

Keep one page for the delay and update it whenever something changes.

• Underwriting: has a written commitment been issued, and which lender conditions are still open?
• Appraisal: the value against the price, any factual errors, any repairs the loan depends on, and what the contract says about a shortfall.
• Title: payoff letters requested, discharges and liens being handled, any questions from the title examiner.
• Dates: the current mortgage commitment and closing dates, and every extension signed in writing.
• Closing: when the buyer's Closing Disclosure was sent, and how your proceeds will be paid, confirmed by phone.