So you’ve done the open houses, the negotiations and now, finally, you have a signed purchase contract that’s ready to go. What comes next? The closing process. How long this can drag on for is a question every budding buyer comes to at some point. The short answer is, it depends. Here we break down the process and explain each part of it. As you’ll see, how long the closing takes depends on whether you’re paying all cash or through a mortgage.
Getting the offer accepted
Just because you’ve made an offer is no guarantee that the sale is done. Far from it. In NYC, the sellers hold most of the cards when it comes to accepting an offer. Until they sign the purchase contract, nothing is legally binding. They might have multiple offers, and you could find yourself in a “best and final offer” situation. There could be some counter offers as you go back and forth with the seller to find an agreeable price. But once you’ve got the price and terms hashed out and they’ve signed on the dotted line you can move on to the next step.
How long will the closing take?
The typical closing time on most homes in NYC is 60-90 days. If you’re paying all cash, you can expect to have your keys in 60 days. If taking out a mortgage expect it to take 60-90 days. If there’s a board approval process such as in a condo or co-op, but especially with a co-op, you can expect things to take longer. Until the board has approved you the home isn’t yours. Thankfully, one of the terms of a standard purchase contract is that you can drop out without any penalties if you fail the board approval process.
What happens after the contract is signed
Once both parties have signed, you are now officially “in contract” with neither party able to walk away without incurring legal penalties. The counter-sign typically takes 1-2 days. If it’s taking longer, you may need to contact the seller to see where things stand.
Once you have the counter-sign, and if you’re taking out a mortgage, your attention should next be turned to your bank or lender to get the mortgage commitment letter sorted. If you haven’t already, you should have your bank carry out an appraisal. Until your bank has the appraisal, they won’t sign off on your mortgage.
Buyers should use this time to complete their due diligence report, which will be handled by their attorney. This will also give the seller time to make their move and get anything else sorted on their end.
Once everything is handled on both ends, it’s time to lock in your mortgage interest rate. Commonly known as the “rate lock” this has a typical time limit of 60-90 days. Don’t do it too soon because if it expires before the close, you’ll end up paying more.
When all this is done, you can look forward to the closing date. Keep in mind that the actual date can change with the usual legal language being “on our about [insert date].” Until you’ve got the green light from your lender, the real closing date cannot be determined.
On closing day, you’ll see most members of the transaction present. Expect to see both attorneys, the brokers, buyer and seller (unless they’ve permitted their attorneys to act in their stead) and the lender’s attorney. Also present will be a representative of the title company who will act as a coordinator between the two parties. Assuming everyone shows up on time, it should only take 1-3 hours, depending on if the buyer is taking out a mortgage or not.
Once everything is signed and done the buyer will receive their keys, and everything should be wrapped up.