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January 19, 2012

2

Mastermind for January 18th. Delayed Closings

by mark mclean

It’s great to be back. This is my first Mastermind Meeting of the new year. I want to thank Amy Medal, from my office, for running last week’s meeting in my absence. We had a great turnout but for those that didn’t make it, you missed a great discussion on delayed closings.

A few weeks ago an agent, who recently sold a house to his client, was contacted by the seller’s agent. The seller’s new home was not ready and they wanted to postpone the closing by a month. The delay was a welcomed by the buyer who now had more time to prepare her own home for sale. But what if she couldn’t move the closing? There are several possible outcomes which, naturally would come at the expense of the person needing the delays. The take away from this scenario is that pretty much anything can be solved if you (a) keep the lines open between all parties and (b) throw enough money at it.

It happens more often than you think. Buyers and sellers have every intention of meeting the terms of their contracts but sometimes things, like closing dates, are beyond their control. Here are just a few of the reasons I have heard over the last few years; Financing delays, Family emergencies, Unexpected problems in the property, Unable to close forgotten permits, Seller unable to meet certain conditions, Seller’s new home has a delay, Buyer has unexpected cash shortage, Buyer hasn’t budgeted for closing costs.

 Most of the time the delay is a simple technical issue that can be sorted out pretty quickly between the lawyers but other times the problems can be quiet serious and can put a lot of stresses on all the parties involved especially when you have a domino effect. But what if your Spidey senses are tingling because you get the feeling that something weird is going on? What if the buyer doesn’t have any intention of closing? A strong market notwithstanding, this can happen too. What are the seller’s options in this scenario? The short answer is…..it’s complicated. If you, as the listing agent, are getting all the signals that the buyer isn’t going to close, it is time to work fast. If your seller is under a time crunch it is crucial to get the house back on the market without delay. Do your usual best to sell it quickly, make sure the offer contains a clause that makes it conditional upon a release from the previous deal. Most sellers think that keeping the buyer’s deposit is a slam dunk. It is not. Real estate companies can only release the deposit by court order or mutual release. The best case scenario is that you sell the house for more than the original deal but if you sell for less, there is some relief.  You do have claim to the deposit to cover any loss, financial and otherwise.

Have a great week and, as usual, I hope that if you have some great stories on closing delays you will take the time to drop me a note.

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2 Comments Post a comment
  1. Johan
    Jan 19 2012

    Delayed closings by the Buyer can be offset with additional deposits to the listing brokerage and a clause indicating that the buyer will pay for extended costs of essential building maintenence, such as heat/hydro, as the seller is now extended and obligated to maintain the property. I have experienced this and have a delay of 6 months in closing. We obtained 40k in additional deposits and agreement that the buyer will reimburse the seller for maintenence costs. Don’t let a deal die…keep it alive and kickin’!

    Reply

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