First, let's quickly define "Escrow." Escrow is a neutral third party that has the responsibility of seeing that the buyer and seller agreed upon terms and conditions are carried out. Escrow is the vehicle by which the interest of all parties to the transaction are protected. At the end of escrow, the seller receives their funds from the buyer/buyer's lender and the ownership of the house is recorded in the buyers name.
For four years in a row, the time it took to go from contract to close was 30 days for a normal transaction between 2005 and 2008 according to C.A.R.'s Annual Housing Market Survey. In the last two years, with the current tough underwriting standards for mortgage loans, escrow is taking a bit longer-about 40 days. But actually the length of time it takes to close escrow is the same as it was in 2003 (just prior to the mortgage frenzy of '04, '05, and ‘06). This shows the market returning to somewhat normal conditions as escrow companies are taking their time to review, document, and close the transaction.
For distressed sales, the length of time to close escrow is about 5 days longer than for non-distressed home sales. And because we know that not all distressed sales are created equal, the problems in closing are largely with short sales as it takes these transactions about 50 days to close escrow from the time the lender approves the sale, versus 35 days for REO/bank owned or foreclosure sales.
I tell my clients right now that even though we are shooting for a 30 day escrow is typically going to be 40 -45 days mostly because lenders are taking extra time with appraisals and document reviews.
clear skies,
Doug Reynolds
Comments(1)