The time it takes to close a real estate sale can significantly impact both buyers and sellers.
Whether you’re eager to move into your new home or need the proceeds from your sale quickly, the method of payment plays a critical role.
Cash transactions and mortgage-based purchases each have distinct timelines that impact how long it takes to finalize a sale.
This article explores the average timeframes for both cash and mortgage transactions, outlining key differences, influential factors, and what buyers and sellers need to know.
This article also includes data-driven insights backed by recent studies and expert opinions to provide a comprehensive view of the topic.
Key Takeaways
- Cash sales tend to close significantly faster than those involving mortgages.
- The average closing time for a cash sale is typically between 7 to 14 days.
- Mortgage-financed transactions average around 30 to 60 days, depending on lender requirements and the buyer’s financial circumstances.
- Key delays in mortgage transactions often involve appraisals, underwriting, and approvals.
Cash vs. Mortgage Sales
Cash sales and mortgage transactions follow distinct processes.
A cash sale involves fewer steps and less paperwork, focusing primarily on the transfer of ownership.
Mortgages, however, require detailed paperwork, underwriting, and numerous steps that make the process longer and more complex.
According to a report by the National Association of Realtors (NAR), cash transactions accounted for about 26% of home sales in 2023, highlighting the appeal of quicker closings for many sellers.
How Long Does It Take to Close a Cash Sale?
Cash sales are known for their simplicity and speed.
When a buyer has the funds readily available to pay for the property outright, they eliminate many of the roadblocks that can delay closing.
In general, cash sales can close in as little as 7 to 14 days, compared to the 30 to 60 days typically required for mortgage-financed sales.
Here are the main steps involved:
Agreement on Terms
The buyer and seller agree on a price and any contingencies.
According to a survey by Zillow, cash buyers can often finalize negotiations up to 40% faster than those requiring financing.
Title Search
A title company or attorney performs a title search to ensure the property is free of liens.
The title search process usually takes just a few days, and since there is no lender involved, the process is typically completed more quickly.
Final Walkthrough
The buyer conducts a final walkthrough of the property before closing, which typically occurs a day or two before signing the final paperwork.
Closing Day
On the scheduled closing day, both parties sign the necessary documents, the buyer transfers funds, and ownership officially changes hands.
In a cash sale, the simplicity of this process allows for a much quicker closing.
The absence of a lender means fewer requirements, fewer third parties, and minimal chances for unexpected delays.
Data from the American Land Title Association (ALTA) indicates that cash sales are completed, on average, 20-30 days faster than financed sales.
How Long Does It Take to Close a Mortgage Sale?
Mortgage-financed transactions take significantly longer to close due to the involvement of lenders, which adds multiple layers of complexity.
According to the Ellie Mae Origination Insight Report, the average time to close a mortgage in 2023 was approximately 45 days. The following steps contribute to the longer timeline:
Loan Pre-Approval
The buyer must be pre-approved, which involves an evaluation of creditworthiness and financial stability.
This can take anywhere from a few days to a few weeks, depending on the complexity of the buyer’s finances.
Freddie Mac estimates that pre-approval can take up to 10 days for some buyers.
Home Appraisal
Lenders require an appraisal to ensure that the property is worth the loan amount being offered.
The appraisal process itself can take 1-2 weeks.
Data from the Appraisal Institute shows that appraisals are a common cause of delays, with about 15% of transactions experiencing extended timelines due to appraisal issues.
Underwriting
During underwriting, the lender evaluates the buyer’s income, assets, debt, and other financial factors.
Underwriting is often the longest part of the process and can take up to 20 days or more.
According to Fannie Mae, about 30% of mortgage delays are due to issues in the underwriting process.
Contingencies
Sales involving a mortgage often come with contingencies, such as home inspections or the sale of the buyer’s current home.
If issues arise, they can lead to significant delays.
A report from Realtor.com found that 25% of delayed closings are due to contingencies not being met on time.
Final Approval and Closing
Once underwriting is complete and all contingencies have been met, the buyer and seller can proceed to closing, which usually takes place at a title company.
Finalizing the paperwork and transferring ownership may take an additional week.
Factors That Influence Closing Timelines
While the above timelines are average estimates, several factors can impact how quickly a real estate transaction closes.
Here are some common elements that can speed up or delay the closing process:
Market Conditions
In a hot real estate market, lenders and appraisers may be backlogged with work, causing mortgage timelines to lengthen.
According to CoreLogic, during peak times, appraisals and underwriting can take up to 50% longer due to increased volume.
Property Condition
Homes in need of repairs may delay the closing if the lender requires these to be completed before approving the mortgage.
A study by HomeAdvisor found that properties needing significant repairs are 18% more likely to experience closing delays.
Title Issues
If the title search reveals outstanding liens or other issues, it can significantly delay the closing process.
Data from the American Land Title Association shows that title issues are responsible for about 10% of closing delays.
Buyer Preparedness
Buyers who have all their documentation ready and respond quickly to lender requests can often speed up the mortgage process.
According to a survey by LendingTree, buyers who submit documents promptly reduce their average closing time by up to 15%.
Cash vs. Mortgage: Pros and Cons for Closing Time
Cash Sales
- Pros: Faster closing, fewer contingencies, lower risk of financing falling through.
- According to a study by ATTOM Data Solutions, cash sales are 28% less likely to fall through compared to financed purchases.
- Cons: Requires significant liquidity, reducing financial flexibility. Buyers need to have funds readily available, which may limit other investment opportunities.
Mortgage Sales
- Pros: Allows buyers to leverage their cash and potentially afford a more expensive property. Mortgage rates have remained relatively low in recent years, enabling buyers to finance homes at competitive rates.
- Cons: Longer closing process, more steps and contingencies, and a higher chance of delays. Data from the Mortgage Bankers Association shows that 12% of mortgage applications encounter significant delays or fall through.
Real-Life Examples
Consider a typical scenario: A seller has received two offers on their home.
One buyer is offering cash, while the other is financing through a mortgage.
The cash offer can close within two weeks, while the mortgage offer might take up to 45 days to finalize.
According to Redfin, sellers are 42% more likely to accept a slightly lower cash offer because of the speed and certainty it provides.
This preference is particularly strong in competitive markets where sellers want to reduce risk.
The Bottom Line
In general, cash sales close significantly faster than those involving a mortgage.
Cash buyers avoid many of the roadblocks typical in mortgage transactions, allowing for a streamlined, efficient process.
However, for buyers who need to finance their purchase, understanding the complexities and steps involved in the mortgage process can help manage expectations and avoid unnecessary delays.
Data from the National Association of Realtors shows that cash transactions close, on average, 30 days faster than mortgage-financed sales.
Whether buying with cash or financing with a mortgage, understanding the expected timelines can make the real estate process smoother for everyone involved.
Cash offers close faster, but mortgages allow buyers to leverage their funds, potentially enabling a more flexible financial strategy.
For sellers, weighing the benefits of a quick close against potentially higher offers that take longer to finalize is key.
Regardless of the chosen method, being prepared and aware of the steps involved can save time and reduce stress during one of the most significant financial transactions in life.
For more information on closing timelines and tips on how to expedite the process, consider exploring resources from the National Association of Realtors, Ellie Mae, and Freddie Mac.
