Profile picture for WhimseyWoman

How long would YOU allow buyers to extend the settlement date?

  • August 19 - US
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Answers (16)

Profile picture for edboner
Get a reason for the request.  Is there an issue with the appraisal?  If you're at the end of the process, I would imagine the appraisal may be a part of the delay and it would be pretty reasonable to ask for time to review or order a second appraisal.  2 weeks should be more than enough time in most cases. 

Now....if you have a backup offer at a higher number or another reason not to grant an extension...... 
  • August 23
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Some lenders are slow and have no sense of urgency.  They not realize the potential legal problems they are creating for the buyer.  From the point of view of a California buyer/seller, 30 days is considered a standard escrow...maybe up to 45 days depending on what was convenient for the buyer and seller.

A one to two week delay beyond the close date (especially a 45-day escrow) is more than enough time to give to the other side to close.  Without seeing how the purchase contract is written, in California, if the buyer does not get an extension by the date escrow is supposed to close, the buyer is in default of the contract and the seller may be allowed to keep their deposit and turn around and sell the home to someone else.  Normally, no one wants to do this because we are almost done at this point so if the sale can be saved, that's normally what everyone wants to do.  What I would propose is if there is a buyer's agent involved, the buyer's agent needs to understand these strong legal actions that may be taken against the buyer if they don't hurry up with closing, then they need to put in writing how much time extension and why...and that you want to verify the information with the loan officer.  At this point, the seller is having to pay PITI for every day that they are closing late.  So what I would propose you issue a Notice to Perform and a Demand to Close Escrow (other states may call it something different), so I would propose to the buyer's agent that if they want a further extension then it will be at a cost of XX amount a day penalty, and you want the buyer to release half of the deposit to the seller and it will be non-refundable.  Releasing a deposit is going to clear up whether the buyer is serious or if we're just wasting time.  If the buyer is serious and they are approved and everything is good, the buyer's contingencies should be removed at this point anyway, so releasing the deposit shouldn't be an issue (unless there's something happening in the background that you're not aware of).  Depending on purchase price and the seller's PITI, I would say propose around $75-100 per day.  Once the lender knows a per diem penalty that the buyer is going to have to pay, the buyer should be really upset with the lender to get them moving.  Somehow things seem to magically speed up when they know the buyer's deposit is at risk and the buyer is paying a per diem fee.  If you can't get any response or the buyer will not cooperate with doing an extension, I would put the property back on the market and continue marketing the property "subject to the cancellation of the existing escrow."  Unfortunately, behind the scenes the deal may already be dead - you just don't know it yet.  Good luck to you. 

  • August 20
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Profile picture for WhimseyWoman

Thanks, all, for taking the time to provide your perspectives! I truly appreciate it.

  • August 20
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Profile picture for judyburkehomes
This is so situation specific. Is it the loan? If so, what aspect of the loan? Is it because physical problems were discovered in the inspection and warrant correction, etc?  Try to get as much information as possible about why there is a delay, and then weigh your options. Use your gut instinct/common sense, but also try not to react emotionally. You need to keep your wits and a level head. You don't want to waste all your hard work and say "no extension" if the finish line is within inches.
  • August 19
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Profile picture for SoCal Engr
Speaking as a consumer/hobbyist/wanna-be...

I would (especially if I didn't already have "plan 2" in place) allow the buyers to extend as long as they needed.

But...

I would make the extension contingent on my being allowed to continue to market and accept offers, including the ability to kick the current transaction to the curb if I get another offer (I wouldn't even say "better", because (a) I don't want to have to quantify "better", and (b) something that will close is likely "better" than a "great offer" that won't).
  • August 19
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I don't see your whole post as to what they told you. It is a standard Underwriting procedure in today's world that ANY deposits over $500 into bank statements provided that are not payroll have to show "trail of funds."  This should have been in the needs list on day three.
If they run an ebay business and get payments they can show the sales and deposits- but may not want to. If granny gave them $700 cash they have to get gift letter from her and her bank statement. This should have been spotted by loan officer when the bank statements came in, maybe Borrower delayed -
I would take a call from a seller as the lender. Get the Lender, Borrower and Realtors on a conference call.
Text, email and vague communication is not going to settle this one. Either they can provide the paper trail, - get actual pdf or paper copy of what was sold, the check and who gave them the check- or they can't.
One Underwriter may be more accepting of trail paperwork that is funky than another, it all depends on the general clarity of the whole file. A bank will have more strict policy than a Direct banker...

Your agent should clearly tell everyone they are changing the status to accepting backups from pending.
  • August 19
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Sorry about this problem. What a headache. The deposit issue can be a huge problem with some Lenders. Perhaps they took it to a new lender or could take it to a new lender when you put your home back on the market. Enough is enough based on your feedback. 

Perhaps another Lender may be more flexible with the deposit issue but it is a standard UW condition. Provide a paper trail of all deposits. I would not wait while they navigate their deposit issue. I would move forward. 
  • August 19
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I am curious, what is your Realtor stating you should do about the situation? 

Its more of a legal situation than anything, so your options may be many, or may be few depending on what the buyers true situation is. Accepted contracts are just that, "contracts", and not easily broken, sorry.

Hope that things work themselves out quickly for you and your family.

Best wishes!

Michael Thacker
Realtor
[Hotlink removed by Zillow moderator. Please see our Good Neighbor Policy for information.] 
  • August 19
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It depends, I think. If the buyer has a financing contingency, I would probably stick it out for as long as the lender needs to close. If I was getting to keep the earnest money . . . it would depend.
  • August 19
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Profile picture for Rebecca Marvel
I'm a Realtor and I'm not siding with waiting.... at least not without knowing the reason for the delays.

Some things are beyond the buyer's control - such as a slow underwriter.

In my experience, when a buyer asks for more than a week's extension, there is something wrong with the loan i.e., the buyer cannot get loan approval for whatever reason and you probably aren't going to close.

I would send them a notice to perform and give them 3 days to provide you with full loan approval and a list of prior to doc conditions. Remember, all states are different and I'm speaking about California. After the 3 days with no response then you cancel and move on to another buyer.

Or - tell them that until they provide you with full loan approval and a list of prior to doc conditions you are putting the house back on the market for back up offers. This will generally kick them in the pattoties because they are at risk of losing the house.
  • August 19
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Profile picture for Dan Tabit
Whimsey, 
The answer will be based on if you believe the buyer's will resolve the issues and if you think a better offer may be out there.  I would have a serious talk with their lender, as the listing agent to get a handle on the issues from the horses mouth.  This would require the buyer's to give the loan officer written permission for them to reveal the details to me. Without this, I wouldn't consider much. If the buyers aren't taking things serious, I would want to move on or have the earnest money released before offering an extension.  
  • August 19
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Profile picture for WhimseyWoman

...well thank goodness sellers can't pay for everything. I think the 10K towards their closing costs without any change (increase) to the list price is plenty.

  • August 19
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I'll do the short version, anyway. That's an issue that has about a 30-day average workout time, if it's workable. The fact that it wasn't instantly (in RE transaction years) fixed, isn't a good sign. You need more detail from the Buyer's, or you need to kick them to the curb, at least temporarily. Has your Agent been attempting to show your house, to backup Buyers, during this pending situation?

Did you know Seller's used to be allowed to pay FHA Buyer's down payments and their closing costs? Well they can't do but one of those now, and the other fact is holding up your deal.
  • August 19
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Profile picture for WhimseyWoman
I don't know why Zillow keeps leaving off the details I post with the questions...

I'm curious about others' personal opinions about their personal thresholds with repeated delays. Assume the house has already been vacated and you were told (in writing, signed by all) that closing would be on or before the date on which you agreed to move out. At this point, you've already allowed for a very short turn-around in order to help the buyers move in before school starts. Now the house sits vacant and the deal has not yet closed.

Tim - It's already been more than "another week or two".
Hamp - underwriters want buyers to provide details about every single deposit in their bank accounts that don't match pay stubs, and the buyers are slow to respond to the requests.

Honestly - hoping to hear from other SELLERS who have been through this. I am assuming most real estate agents will side with waiting... and I imagine that's because if it doesn't go through, they don't get their commission and also risk the sellers finding a new listing agent. 
  • August 19
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What is the supposed loan problem?
  • August 19
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Profile picture for Outer Banks N C
As long as they need as long as there is light at the end of the tunnel. What is your other option? Toss out the contract and buyer and start all over which could take months, or wait another week or 2?

  • August 19
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