Today is the last day of March. In the world of real estate, the last business day of the month is typically the busiest for closing properties. And I have always wondered if it’s more about tradition than anything else.
Since mortgage payments typically are paid on the first day of the month, there has always the notion of the seller not having to make the next month’s payment and the buyer not having to pay an interest adjustment.
But in the seller’s payments are in arrears, and the prorated payment is added to the payoff amount anyway, and for the buyer, it’s actually less expensive to pay the interest-only adjustment and have the first payment delayed an additional month.
And buyers that currently have leases typically have to be out of their current rentals by the first of the month, leaving precious little time to move, let alone allow for any slack time if anything goes wrong.
So since there is no economic or practical benefit to closing on the last day of the month, it has to be more of a tradition. We are mentally trained that house payments and rent are associated with the first of the month, and that therefore, when a contract is constructed, the last business day of the month seems like an appropriate target.
And so today, like every other last day of the month in the real estate business will be a busy day.
And I will be scrambling!
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