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When you make an offer to purchase a property here in Ontario, one of the choices you can make is the closing or completion date. That’s the date the title will transfer to you. In some cases, the seller is very specific, for a number of possible reasons. For example, they may have already purchased another property, or they may want time to sell their property. Oftentimes, there is no guidance given, and the choice is up to you.
Which is better, clients ask me: a short closing, or a long one? First, short is relative. You’ll need time for all the legal activities to take place, and for the title search. You will need time to set up utilities, insurance, and to organize your move, if the property is meant to be your principal residence. However, let’s assume a fast closing is 30 days, or a month.
Short closings are great in one respect – that property is yours very quickly. It’s not long before you will have the keys in your hand. Other advantages include little likelihood that interest rates or your terms of borrowing will change, assuming you don’t do anything to seriously impact your credit. (I’ve cautioned you not to go buy a new car or a bunch of furniture on your credit cards, right?) A short closing also works well for buyers who are better at working to a deadline. The rapid timeline means you need to make quick-fire decisions about purging and packing.
Long closings buy you time – which you may need if your move is a complex one. 90 days or more will mean that you have extra weeks to get your property sold, or to find a mover, especially during busy season. It might mean that your kids can finish out the term at school, or that you can fit the move around your holidays. Longer timelines also mean more time for things to go wrong – such as problems at the new home (think fires, floods, or broken appliances). Even though each of these has a specific set of rules around it (the seller needs to maintain insurance, for example), they might still delay your move when you already have a firm date to leave where you currently live. Also, if you’re mortgaging your new property, as most people are, interest rates may go up, and you may have to come up with extra cash, especially if you have a high ratio mortgage.
Ultimately, as a REALTOR®, I can give you guidance on these pros and cons – but the decision is yours. I also have a couple of rules-of-thumb around closing dates:
- Take into account any statutory holidays/long weekends that fall between the agreement to purchase and the closing date – they will impact the number of days for conditions, potentially, as well as time needed for legal work, financing, and title searches.
- If possible, avoid closing during a stat holiday week – with financial institutions and other offices closed, it gives you more breathing room if you don’t.
- Also, many clients have told me they were glad they didn’t close on a Monday, or a Friday – if a “wrinkle” pops up during closing it’s easier to get it smoothed out during the week, and if something goes wrong like a mover not showing up, trying to get it sorted on a Friday or over a weekend for a Monday closing can be really challenging.
- Don’t forget to check your travel schedule, for work or leisure. Several times I’ve had clients ask for a date only to realize later that it falls when they will be in transit. Not impossible, but it adds stress that really isn’t necessary.
© Megann Willson 2023. All Rights Reserved.