Several factors can influence how long it takes to buy a house, but you don’t need to know them all to get an idea of how much time it will take to for you to get the keys in your hand.
A typical home purchase with financing in the Los Angeles area can be expected to close escrow in about 30 days, assuming there are no delays. However, things can vary drastically depending on a number of variables.
To better understand how long it takes to buy a house, we will be looking into three main factors that can impact your escrow length:
- Payment: Financing vs. Cash
- Sale type: Standard, Probate, Short Sale, etc.
- Market Type: Buyer’s vs Seller’s Market
Payment: Financing vs. Cash
Financing, or lack there of, can have a major impact on your escrow length. The one component that takes the longest to resolve during a real estate transaction is the financing portion. When purchasing with financing, your escrow length is longer due to the fact that you must:
- Property Appraisal: 14 – 17 days
- Loan Approval, funding and closing escrow: 30+ day process
The standard appraisal and loan time frames are 17 and 21 days, which add 3+ weeks to your escrow. There are no major differences in regards to timeframes between the typical loan types, such as VA, FHA, and Conventional. Each takes approximately 30 days or so, though they each have different guidelines.
Can you close escrow sooner than 30 days if purchasing a home with financing? YES, but it depends on your lender and their capabilities. Some lenders have the ability to put their clients through underwriting prior to locating a property, significantly reducing the time it takes for the buyer to get formal loan approval. However, the fastest way to buy a home is to purchase with cash.
Paying cash for real estate will drastically reduce the amount of time required to close escrow. When buying in cash, all the buyer needs to do is inspect the property and come to terms with the seller regarding any repairs or credits. Negotiating repairs / credits can happen in days instead of having to schedule an appraisal and waiting weeks for loan approval.
Although paying in cash can help shorten the escrow length, some properties require more time to close regardless of the type of financing. This is where Type of Sale comes into play.
Type of Sale
Most homes listed for sale are Standard Sale listings.
A Standard Sale – A standard sale refers to the sale of a property that is being sold by a homeowner who has equity or value in the property above and beyond the amount they owe, if any.
In these transactions you are dealing directly with the owner of the home, Standard Sale escrows move as fast as the lender does, seller willing of course. Under normal circumstances without any major delays, you can expect to close escrow between 21 and 35 days or so. Cash offers, as mentioned previously, will have the ability to close as soon as buyer and seller come to terms, which can happen in days!
However, sometimes transactions do not offer the luxury of dealing directly with the decisions, and that can cause extensive delays. You may be a cash buyer who can close in just 10 days, but if you are buying a probate or short sale property, you can expect to wait longer.
Other transaction types, such as probate, short sales, or foreclosures can take much longer than 30 – 45 days because you are not dealing with a single decision maker. To learn more about the different types of real estate sales visit our Real Estate Sale Types post!
One of the most important factors to keep in mind when figuring how long it will take you to buy a home is your current market conditions.
Your Current Market
Up until now we have been talking about how long it takes to get through the escrow portion of buying a house. But the time it takes to find your home in the first place can also vary depending on your current market.
As a buyer, getting into escrow can be a piece of cake in a Buyers Market – A Buyer’s Market is an economic situation where supply exceeds demand, giving buyers negotiating leverage over sellers. This situation is great for buyers, as there is usually plenty of inventory to choose from with lower prices and most sellers would be happy to work with you.
On the other hand, the opposite is true in a Seller’s Market – A Seller’s Market is a situation where demand exceeds supply, giving sellers negotiating leverage over buyers. Unfortunately, the last few years have been very strong Seller’s Markets, with lots of buyers competing over little inventory which also pushes prices higher.
Competing in these markets can be challenging, but we can help prepare you! Learn more by viewing our post How to be Competitive in a Hot Market.
The time it takes to buy a home depends on 3 main factors:
- How you are purchasing, either financing or paying full in cash.
- The sale type of home you are buying.
- Your current real estate market: Buyer’s or Seller’s market.