What could possibly go wrong during escrow?
As I was sighing that I wish that I would have a hassle-free and smooth transaction, someone asked me....
What could possibly go wrong during escrow?
Buyer does not qualify for the loan
Buyer loses job or is unexpectedly relocated.
Property does not appraise for the price that the buyer has offered
Lender/underwriter doesn't complete loan process on time, or has more conditions to resolve before approving loan. For example, an FHA loan appraiser may identify Section 1 items that need to be cleared.
Buyer does not clear his contingencies in time. And even when the seller issues Notice to Perform, buyer does not comply
Significant repair issues are identified during inspections. Buyer requests credits/repairs or price reduction. Seller refuses. Negotiation breaks down.
Buyer does not deposit earnest money into an escrow account in spite of constant follow ups
Cancellation of contract is instituted, but one party refuses to sign or to allow deposit to be returned to buyer
Buyer's own house was under contract -- but HIS buyer backs out and cancels that sale
Buyer or Seller gets cold feet and wants to cancel agreement
One of the parties to the agreement gets deathly ill...and sometimes, somebody passes away
A day before close of escrow, one party refuses to allow transaction to proceed due to unfulfilled commitment (I know of a million dollar sale that was delayed because the seller didn’t deliver, per prior agreement, a permit signed off/approved by the city bulding inspector)
House suffers a calamity --- fire, burglary, hurricane, etc --- during escrow period and could not be delivered in the same condition as when the buyer wrote the offer
Seller was discovered to not have legal authorization to sell the property
Mechanics liens are filed against the property
Other parties, such as heirs, file suit to halt the sale
And of course, there are the other myriad challenges with other types of sales like short sales. And that’s another whole book!
Indeed, what are the various events that could possibly derail a transaction?
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57 Comments on What could possibly go wrong during escrow?
Michelle -- would love to see your list
John -- Can't spend that money before the check clears
Ginny -- I had one hassle-free closing this month. The rest are challenging for various reasons
Ed and Tracy -- doing out best for our clients also involve being cool calm and collected
Mike --- I've encountered many of these challenges. The others, my friends have experienced, including having the seller die just before close of escrow
Wayne and Jean -- we never know what's going to come up
Christiansen team -- it helps to be prepared, and to also tell clients that many of these challenges are not completely unexpected
Frank -- you raised another question....does a closed escrow guarantee we'll get paid soon?
Michael -- the negotiation hardest to overcome when one is faced with stubborn and unreasonable parties.
Sally and David -- you just gave me an idea....thanks!
Randy -- what a reminder of what is involved....in the spinning wheel, one never knows where it stops. And all our transactions are like one gigantic wheel
Mark -- I can only imagine what happens to all the escrows when hurricanes hit!
Susan -- smooth sailing doesn't seem to apply to real estate transactions
Lisa -- apparently, this list may not be long enough since there are other situations I haven't mentioned
Lucas -- thanks for the kind words!
Charlie -- when it comes to clients who don't see when a deal is good enough but who wants more, more, more...then maybe it's time for the agent to "fold 'em" and say, "Next!"
Harry -- making follow up phone calls is an absolute necessity. Sometimes, it's the squeaky wheel that gets attention
Richie -- you're right. It's a matter of IF as much as WHEN an escrow closes.
Tatyana -- since so many of these are the new "normal"....we just have to keep plogging along!
Gretchen -- and when the escrow doesn't close...we've lost all that time and effort and money.
Rob -- there's only one way to be in this job: be optimistic. That's why when one falters, we always tell ourselves, "NEXT!". I truly believe there's a good reason for every thing.
Nancy -- during these times, it truly helps to be an optimist. It takes us to our happy place. And when that fails, have a glass of wine, not whine!
Adrian -- we never know what's going to happen from escrow to escrow. Some that we expected to be slam dunk and smooth sailing could be the most treacherous of all!
Jeff --- I've had buyers who were moving right along on an escrow...then boom! They decide it's better for them to get a divorce instead.
Gary -- someone dying in the middle of an escrow is not unusual. I've also heard of one where the elderly seller was diagnosed with Alzheimer's disease, and as such was not in full control of her faculties.
Kathy --- yes, it does show what we have to deal with from day to day. We're tough, and the going gets rough, the tough get going!
Chris Ann -- Absolutely...one of the parties could be hospitalized, or die unexpectedly. Happened and happens!
Bryan -- lender/underwriter not completing his part in time is a pet peeve....totally preventable. After the escrow closes, I always encourage the client to give feedback. And I make a mental note of whom NOT to use
Satar --- when it closes escrow, that's when it goes on the books!
Karen -- a realtor's job is never done until the paperwork is done :)
Pacita:
Now a days it seems that closing an escrow on time is not possible. Some thing always comes up to delay the close. It can be very frustrating.
Hi Pacita. There certainly are a LOT of things that can go wrong. I hope you've not experienced most of what you've listed. As others have mentioned, this is why a good agent is needed in any sale.
Bruce
Pacita, thank you for this post and for listing some of the things that can go wrong with a transaction.
I work as a Transaction Coordinator and it is my job to make sure that I minimize the risk of not closing due to missed dates and contingencies. Also keeping in touch with Lenders to ensure that the loan is being processed and there are no problems.
Agents who work with Transaction Coordinators see the value of using this service as it allows them to focus on selling more homes and not dealing with the paperwork.
Have a wonderful day!
It seems like there is something new we discover that we did not know was possible the more business you do.
It's amazing how many things can go wrong. I've never had a "quiet" escrow. Things have almost always worked out, but something almost always comes up. Sometimes its big, sometimes its small.
Jim -- thanks for the kind words
Sandy -- you said it. It is through adverse conditions that we prove our worth to our clients
Ed -- you're right. Certain things we can handle. The rest is in God's hands
Carla -- yep, we never know when and what could happen to an escrow. Seems like there's something new every day
Ginger -- there's a realtor who's 85 years old, and she's still doing open houses. Wonder if I can hang on that long
Michael -- having that headache now. Sellers refused to get their inspections. Buyers did, and requested huge credit. Sellers refused. Wants to relist at same price in spite of what was found. Big SIGH
Evelyn -- that's why whenever I have a hassle-free closing, I celebrate!
Bruce -- when things go wrong, an agent with nerves of steel is worth his weight in gold
Christine -- by all means...add to the list. We need to show our clients what we have to go through
Chuck --- the longer we stay in business, the more we learn, experience especially since everything else changes.
Ruthmarie -- I've had some smooth transactions. But they are in the minority.
Sharon -- indeed, a transaction coordinator or personal assistant can help us in a huge way
This is why we no longer bill through escrow. Once the deal falls through people suddenly think they have no obligation to pay and there are SO many reasons why deals fall apart these days.
Spectrum
Totally understandable, and totally fair. At least when you do your inspections, you get paid for the work
For us REALTORs, we can do a lot of the work pre- and during escrow, but when the escrow falls apart, we don't get paid a cent!
Along the lines of our 21 things that can go wrong after escrow. Good luck and Happy Posting
I have often thought about writing a book on this subject many times. Great info.
Sure is a lot to go wrong but hopefully it won't. Being parpared can avoid a lot of this.
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