This week, the National Association of Realtors® is posting an interesting series of articles that look at 2014 real estate transactions ‘By the Numbers.” In the first post, Danielle Hale, Director of Housing Statistics, looked at the Most Popular Closing Dates in 2014 for existing home sales.  The data shows that the last business days of the month, and Fridays, are the most popular days to hold a closing.

It may surprise you to know, that we generally do NOT recommend scheduling your real estate closing on either of those days!

So, why ARE Fridays & the last day of the month the most popular days to close?

• If the Buyer has been a renter, their lease or rental arrangement, is likely to end on the last day of the month. It just makes good sense to coordinate the end of the rental period with the purchase date.
• If a closing occurs toward the end of the month, the Buyer who is obtaining a mortgage pays less accrued interest expense at closing.  Interest is paid in arrears, so for a close on the first of a month, a Buyer will pay the full month of accrued interest at closing, as opposed to a day or two worth of interest when closing on the last business day of the month. This can make a difference for a Buyer with limited savings.
• Buyers also like Friday closings because they then have the weekend to move, when helpers are usually more available, and get settled in before heading back to work on Monday.

Why do we NOT recommend closing on a Friday or the last business day of the month?

Because unexpected delays, usually having to do with financing, can push a planned closing date out into the future.  We feel it prudent to build in some “wiggle room” for those who may be more adversely affected by a delayed closing.

• If a closing is set for a Friday and there is a delay with the Buyer’s loan, a weekend closing is probably not an option. The following Monday may be the very first opportunity to close once an issue is resolved. It is better to have the very next day available as an option, and the day after that, if possible, too!
• This same rationale goes for the last business day of the month, except, now if you are the Buyer, you just went from paying a day or two of accrued interest to paying a full month’s worth at the closing table – – because the next business day will be the beginning of a new month. That could be a difference of hundreds of dollars that a Buyer will owe at closing.  If a Buyer is renting, and needs to vacate by the end of the month, they may also be homeless for a couple days.
• In busy times, it’s also more difficult to schedule a closing time on a Friday or last business day of the month – – you are competing with other closings that the title company or attorney must schedule for those popular days.  Coordinating schedules may be a hassle, and you may not get your preferred time or location to close.

So, in truth, these recommendations don’t hold for all of our Clients – We do consider each individual situation when discussing potential closing dates at the time we are writing an offer for a Buyer Client or reviewing an offer with a Seller Client.  And, obviously, cash Buyers are not subject to delays caused by lenders, so can usually close on their own schedule.

Where a closing delay could be problematic, we recommend scheduling the closing for a Tuesday, Wednesday or Thursday if that can work for all parties, or 2-3 days prior to the last business day of the month. If a delay occurs, most lender issues can be resolved in that 2-3 day timeframe and still accomplish the closing without big additional expense for the Buyer.

On a side note, we also do NOT recommend Monday morning closings. If buyer funds are being transferred from an out-of-state financial institution for closing, there is a chance they won’t arrive on time (time zone differences are not in our favor here on the East Coast). If you must close on a Monday, schedule it for the late afternoon just to be safe!

An offer isn’t just about price!  The Closing Date is one of the many terms of an offer that is proposed by the Buyer, and agreed to by the Seller at the time the Purchase & Sale Agreement becomes the contract.  Ultimately, our Clients decide what gets written into the contract, but we discuss the possible implications of EACH term of an offer to inform those decisions.