Give yourself extra time when choosing a closing date
Closing dates are usually not fixed
Many people think a closing date (also called “close of escrow”) is set in stone when, in reality, it rarely is. That’s actually a good thing because many variables affect the timeline of buying or selling a home. Your timeline probably isn’t too flexible, especially since most transactions involve a Fort Knox, Kentucky, military relocation. If you are concerned with the timeline, then you should include the phrase Time is of the Essence. If you don’t include it, understand that you have a “soft” closing date, more of a goal you’re shooting for. You would be surprised that many agents don’t even know this.
Buying a brand new home
If you’re buying a brand new home, you must often ensure it’s finished on time. How do you do that? There needs to be a condition in the contract (other provisions) that breaks down what will happen if the home isn’t done when you need it. You want to avoid being stuck in a hotel with your stuff in storage, especially if you’re footing the bill.
Put something in the contract to protect yourself
You could say, “House to be finished and ready for closing (including all final inspections) by MM/DD/YYYY or builder to cover buyer’s hotel costs up to $80/day and storage up to $50/day until closing. Time is of the Essence”. Of course, this is just an example, and we are not lawyers, so mold this to your specific situation. Buyers and sellers could also do something like this with an existing home.
Don’t wait until the last minute (an actual transaction)
A good example of a closing date needing to be set in stone involves a home buyer tax credit. I encouraged my buyer to set the closing for mid-June because the deadline was June 30th. He was certain we wouldn’t have any delays, but he did compromise and decided on the 22nd of June. Sure enough, there were mortgage underwriting delays; he closed on the 30th and almost missed out on the tax credit.
UPDATE: Interest rate lock
One thing we missed here was the interest rate lock issue. If you have delays, your rate lock could expire, so you will have to return your rate to floating and be subject to market fluctuations in your rate or pay a fee to extend your rate lock.