Continuous Closing Delays

[AFelder]

In the process of selling home and have had the closing delayed 3 times due to the buyers financing. Have already moved into an apartment because before we became aware of the financing problems the buyers asked us to close earlier than first agreed upon. If they can not obtain financing, what recourse do we have for the expenses we have incurred, such as storage, apartment rent and cost to break lease if we have to? How long can they delay the closing? Don't know what to do....

 

[HomeGuru]

<BLOCKQUOTE><font size="1" face="Verdana, Arial">quote:</font><HR>Originally posted by AFelder:
In the process of selling home and have had the closing delayed 3 times due to the buyers financing. Have already moved into an apartment because before we became aware of the financing problems the buyers asked us to close earlier than first agreed upon. If they can not obtain financing, what recourse do we have for the expenses we have incurred, such as storage, apartment rent and cost to break lease if we have to? How long can they delay the closing? Don't know what to do....<HR></BLOCKQUOTE>

Are you using a Realtor or a real estate attorney to help you? I sure hope so. There should be provisions in the sales contract regarding closing, delays, time is of the essence and Seller remedies for cancellation and specific performance. It is not uncommon to experience a 30 days and even longer delay due to financing. If there was a financing contingency in the sales contract, meaning if the Buyer does not obtain financing there is no sale, then all your expenses are your own to bear. There should also be a time line in the contract setting forth specific dates and milestones for completing specifc items such as loan preapproval letter, real estate appraisal, loan committment etc. There should also be a specific performance clause in the contract which you should refer to. Some contracts have a built-in automatic closing extension clause due to extenuating circumstances such as financing, while other contracts specify that both Buyer and Seller must mutually agree in writing to any extensions beyond the specifed closing and recording dates noted in the contract.

 

[AFelder]

New twist to story, closing delayed again. Mortgage company wanted us to fax them a statement saying that we were paying closing cost. We would not agree to fax such a broad statement. Instead we faxed a statement saying that we were paying the closing cost as stated on the contract. Requested a conference call with agent and mortgage company. Found out that seller was short money (about $3000) needed for their part of down payment and closing cost. This is even after we agreed to do short term financing for $3000 plus interest and any attorney fees. Doesn't look good right now. Is there anything that we can do. Have already moved into apartment and signed a 7 month lease plus all the other expenses that go along with moving. We live in North Carolina.

 

[AFelder]

New twist to story, closing delayed again. Mortgage company wanted us to fax them a statement saying that we were paying closing cost. We would not agree to fax such a broad statement. Instead we faxed a statement saying that we were paying the closing cost as stated on the contract. Requested a conference call with agent and mortgage company. Found out that seller was short money (about $3000) needed for their part of down payment and closing cost. This is even after we agreed to do short term financing for $3000 plus interest and any attorney fees. Doesn't look good right now. Is there anything that we can do. Have already moved into apartment and signed a 7 month lease plus all the other expenses that go along with moving. We live in North Carolina.

<BLOCKQUOTE><font size="1" face="Verdana, Arial">quote:</font><HR>Originally posted by AFelder:
In the process of selling home and have had the closing delayed 3 times due to the buyers financing. Have already moved into an apartment because before we became aware of the financing problems the buyers asked us to close earlier than first agreed upon. If they can not obtain financing, what recourse do we have for the expenses we have incurred, such as storage, apartment rent and cost to break lease if we have to? How long can they delay the closing? Don't know what to do....<HR></BLOCKQUOTE>

 

[AFelder]

Thanks for your advice but there is a new twist to story, closing delayed again. Mortgage company wanted us to fax them a statement saying that we were paying closing cost. We would not agree to fax such a broad statement. Instead we faxed a statement saying that we were paying the closing cost as stated on the contract. Requested a conference call with agent and mortgage company. Found out that seller was short money (about $3000) needed for their part of down payment and closing cost. This is even after we agreed to do short term financing for $3000 plus interest and any attorney fees. Doesn't look good right now. Is there anything that we can do. Have already moved into apartment and signed a 7 month lease plus all the other expenses that go along with moving. We live in North Carolina.


<BLOCKQUOTE><font size="1" face="Verdana, Arial">quote:</font><HR>Originally posted by HomeGuru:
Are you using a Realtor or a real estate attorney to help you? I sure hope so. There should be provisions in the sales contract regarding closing, delays, time is of the essence and Seller remedies for cancellation and specific performance. It is not uncommon to experience a 30 days and even longer delay due to financing. If there was a financing contingency in the sales contract, meaning if the Buyer does not obtain financing there is no sale, then all your expenses are your own to bear. There should also be a time line in the contract setting forth specific dates and milestones for completing specifc items such as loan preapproval letter, real estate appraisal, loan committment etc. There should also be a specific performance clause in the contract which you should refer to. Some contracts have a built-in automatic closing extension clause due to extenuating circumstances such as financing, while other contracts specify that both Buyer and Seller must mutually agree in writing to any extensions beyond the specifed closing and recording dates noted in the contract.<HR></BLOCKQUOTE>

 

[HomeGuru]

<BLOCKQUOTE><font size="1" face="Verdana, Arial">quote:</font><HR>Originally posted by AFelder:
New twist to story, closing delayed again. Mortgage company wanted us to fax them a statement saying that we were paying closing cost. We would not agree to fax such a broad statement. Instead we faxed a statement saying that we were paying the closing cost as stated on the contract. Requested a conference call with agent and mortgage company. Found out that seller was short money (about $3000) needed for their part of down payment and closing cost. This is even after we agreed to do short term financing for $3000 plus interest and any attorney fees. Doesn't look good right now. Is there anything that we can do. Have already moved into apartment and signed a 7 month lease plus all the other expenses that go along with moving. We live in North Carolina.<HR></BLOCKQUOTE>

Don't you mean that the Buyer and not the Seller is short the $3000? There are several options to close, ask the Realtor and the escrow company for ideas. You can agree to pay the closing costs, you can reduce the sales price by the like amount, credit something, pay the money for the Buyer and take back a second mortgage for the like amount, offer to split the $3000 with you paying half, ask the Realto to reduce the sales commission etc.

 

[AFelder]

Thanks for the correction, the buyer is still short $3000. We are already paying $1600 in closing cost and doing a short term loan for $3000. Is there such an option as them financing the closing cost into the loan? The buyers don't have good credit and are using B/C lenders to purchase this home so I am not sure if they can qualify for a larger purchase amount. I feel like the buyers had to know about their financing problems, most importantly that they were short over $6000, so I am a little leary of a short term loan for anything larger than the $3000 we already committed to. We were depending on the proceeds from this sale as the downpayment to build our own home so don't want to end up losing money on this sale.

<BLOCKQUOTE><font size="1" face="Verdana, Arial">quote:</font><HR>Originally posted by HomeGuru:
Don't you mean that the Buyer and not the Seller is short the $3000? There are several options to close, ask the Realtor and the escrow company for ideas. You can agree to pay the closing costs, you can reduce the sales price by the like amount, credit something, pay the money for the Buyer and take back a second mortgage for the like amount, offer to split the $3000 with you paying half, ask the Realto to reduce the sales commission etc.<HR></BLOCKQUOTE>

 

[HomeGuru]

<BLOCKQUOTE><font size="1" face="Verdana, Arial">quote:</font><HR>Originally posted by AFelder:
Thanks for the correction, the buyer is still short $3000. We are already paying $1600 in closing cost and doing a short term loan for $3000. Is there such an option as them financing the closing cost into the loan? The buyers don't have good credit and are using B/C lenders to purchase this home so I am not sure if they can qualify for a larger purchase amount. I feel like the buyers had to know about their financing problems, most importantly that they were short over $6000, so I am a little leary of a short term loan for anything larger than the $3000 we already committed to. We were depending on the proceeds from this sale as the downpayment to build our own home so don't want to end up losing money on this sale.

<HR></BLOCKQUOTE>

The B/C lender category is already a red flag. In some circumstances the lender could finance the closing costs but on this transaction, the loan to value ratio is too tight already due to the credit history and borrowing power of the Buyers.

Do not forget your other option of terminating the transaction.