Used to be – and I say that with all my two years of real estate experience – use to be that once a buyer and seller agreed on price and terms, closing would follow about 30 days later. However, now that short sales, foreclosures, government assistance programs, and bad credit have become more the norm than the exception, closing dates are getting pushed further and further out. In my own business, for example, three closings scheduled for early June have all been postponed to later in the month.
One of my client couples, more than qualified to purchase the home they found, struggled to get financing for the home because we couldn’t find a bank that offered a loan product to match the timing of their occupancy (18 months after closing). Once we found a lender with the right loan product, the inspection revealed a laundry list of repairs that had to be made on the property. Buyer and seller agreed to extend the closing date four days to accommodate the repair list. This may not sound like a big deal – four days – but when you’ve got everyone making arrangements to meet a specific date and then the date gets changed, it causes a chain reaction that affects just about every aspect of the move for both the buyer and the seller…
Someone’s gotta check with the lender to be sure the rate lock won’t expire, which could cost the buyer a boatload of money they don’t have. Gotta check to make sure the termite letter hasn’t expired, which lasts only 45 days. Gotta call and rearrange the movers, and cross fingers their schedule lines up with the new moving day. Gotta get the attorney’s schedule and make sure they have a time available to close on the new date that also matches up with the buyer’s schedule, the seller’s schedule, the bank’s schedule, and the schedule of two real estate agents. Gotta call the utility companies – again – to reschedule the on and off dates, which may or may not carry a fee. Gotta alert the home owner’s insurance companies on both sides that there’s been a delay. Gotta make sure the seller’s employer – and the seller of the house they’re buying – will wait. Gotta make sure the buyer’s buyer will wait if they had a house to sell, since they too will have to rearrange a million things on their side. Gotta extend leases, extend POD contracts, reschedule friends who said they’d help unload the truck. And on and on.
Contract to closing on that house: 4/15/09 to 6/5/09, or 51 days.
Another closing that’s been delayed is a short sale. (Big surprise.) These typically take some time, so we allowed for that in the purchase contract. Contract date was 4/22/09, original closing date was 6/8/09. Buyer and seller were happy as clams about the deal, they moved forward with inpsections and repairs and the loan, etc. Meanwhile I hired a short sale specialist to negotiate with the bank since I know it takes just about all the energy a person has to harrass them enough to get a response, much less approval on a short sale. I also helped my seller complete his hardship package, and launched an endless campaign of market reports, data analysis, showing trends, solds comparisons, neighborhood traffic, and more to convince the bank the offer we presented was the best they could hope to get. We received approval from the bank last week, which didn’t give the buyer’s lender enough time to complete the loan for closing on the 8th. We are now set to close on June 16. Not bad for a short sale, but we still had to really hold the buyer’s hand to keep him from shopping for another house since his family is out of state and his apartment lease is set to expire next week with the original contract. Here again, moving closing 8 days doesn’t sound like much, but it was.
Contract to closing on that one: 4/22/09 to 6/16/09, or 55 days.
The third closing I’ve managed to hold together involves a foreclosure (so a bank), a first-time home buyer, and a state housing assistance program. The buyer’s budget was low and she was looking for a great deal (who isn’t?). We found a nice house owned by Citigroup and made an offer. This bank has been great. They replaced all the carpet for us, they painted, tore down wallpaper, serviced the HVAC unit, fixed the hot water heater, etc., etc. Because of the state program we knew when we wrote the contract that the closing date needed to be at least 60 days out. We wrote it on March 31,2009 to close on June 1, 2009. We completed our inspections, the lender moved forward with the loan, we completed the state’s list of paperwork to comply with the grant money procedures, and then we waited. May 6 everything was done on our end, including the lender’s appraisal, and we’re still waiting. Similar to a short sale situation I’ve called the program director, I’ve e-mailed her, I’ve called the lender, the attorney, the buyer is a wreck, and there was NO ANSWER as to when the state could complete their inspection so we could get the grant money and close. Closing date came, and finally we learned the inspection will be Thursday morning. We filed an extension (I’m getting real good at that) with the bank, hoping to get them to hang in there with us just a little bit longer. We’re set now to close June 12, but with no response yet from the bank, we’ll see.
Contract to closing on that one: 3/31/09 to 6/12/09, or 73 days.
Funny thing is, none of these three closings have actually happened yet! They could all get delayed again. Let’s hope not, but they could. Good thing I’m still calling and e-mailing everyone like a mad woman. If there’s one thing I’ve learned about this crazy real estate business, Yogi Berra said it best: “It ain’t over til it’s over.”
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