What can go wrong in a Real Estate Transaction? Let me count the ways!

“So What can go wrong with our escrow?” Let me count the ways! ESCROW POTENTIAL DELAYS

(My apologies for the formatting issues with this post--did not translate very well!) It is the wise client who prepares for problems before they happen! As a Realtor who has slogged through the real estate trenches since 1978, there are many ways an escrow can be delayed or “DFT”--deal fell through. The smart, savvy Realtor knows delays are part of the process and like a chess master, attempts to anticipate move and counter-move. For this reason I would like to share my problem checklist that keeps me busy every day. Since a closing isn’t closed until it is closed (I think Yogi Berra said that!) the following items are our potential roadblocks.

LENDER:                                                                              DELAY:

Lenders and Realtors will soon be dealing with TILA-RESPA Integrated Disclosure (TRID) rules. Delays? Maybe 7 to 10 days or more to handle the disclosure triggers inherent with these new disclosures. This may become # 1 on my lender delays list. Others are:

1. Lender does not properly pre-qualify borrower.                                  2 weeks or more*
2. Lender decides last minute they don’t like borrower.                         2 weeks or more*
3. Lender decides last minute they don’t like the property.                    2 weeks or more*
4. Lender wants property repaired or cleaned before close.                  1 to 3 weeks *
5. Lender requires, last minute, re-appraisal or appraisal review.                                                                                                            2 weeks or more *
6. Underwriting Failure—Major Deal Killer!                                              1 to 3 weeks*

 THE COOPERATIVE AGENT (?):                                            DELAY:

 Either representing the Seller or a Buyer in a “co-operative” sale (85% of all listings sold in our local MLS are this type) you will have a “cooperating agent” to contend with. Some are more cooperative than others! Our Realtor network knows the lump of coal versus the gleaming diamonds.

1. Won’t return phone calls.                                                                 1 to 3 weeks

2.   Did not pre-qualify the client for motivation.                               2 weeks or more *

4. Goes on vacation and leaves no one to handle file.                     1 to 4 weeks
5. Does not understand or lacks experience in real estate.            1 week or more *
6. Poor people skills.                                                                               1 to 3 weeks
7. Gets client upset over minor points.                                               1 to 3 weeks *

 8. Does not communicate with their client.                                       1 to 4 weeks

          THE BUYER:                                                                 DELAY:

 We always like to have a “come to Jesus” meeting with our buyers to explore just what they wish in a new home, motivation as to why they are buying, do they have a home to sell? Are they in escrow on the current home in another state? Questions and more questions flush out the real property they desire and how and when we will help them realize their goals.

1. Did not tell the truth on loan application.                                  1 week or more *
2. Did not tell the truth to their agent.                                             1 week or more *
3. Submits incorrect tax returns to lender.                                    4 weeks-more*
4. Lacks motivation.                                                                            1 week or more *
5. Source of down payment changes.                                              1 week or more*        
6. Family members do not like purchase.                                      1 week or more *
7. Finds another property that is a better deal.                            1 week or more *

          Usually on the way to the escrow company!

9. They are "nibblers" (always negotiating)                                   1 week or more *
10. They do not execute paperwork in a timely manner.             3 weeks or more *
11. Funds needed to close are really not as stated.                        1 to 2 weeks*
12. Job change, illness, divorce, or other financial setback.        3 weeks or more *
13. Does not obtain insurance in a timely manner.                      1 to 4 weeks

SELLER:                                                                              DELAY:     

With Sellers the biggest cause of delays is with the house or finding a move-up or down house. Obtaining inspections and reports prior to market launch mitigate issues. Here’s my “lucky 13” list of Seller delays.

1. Has hidden defects that are subsequently discovered.         1 week or more *
2. Unknown defects are discovered through

Additional reports.                                                                               1 week or more *

5. Home inspection reveals average amount of small               1 week or more *

defects that seller is unwilling-willing to repair.

6. Removes property from premises that buyer                         1 to 3 weeks

Believed was included.

8. Is unable to clear up problems or liens.                                   1 week or more *
9. Last minute solvable liens are discovered.                              1 to 3 weeks
10. Seller did not own 100% of property as                                    1 week or more *

Previously disclosed

11. Seller thought partners signatures were "no                           1 week or more *

Problem" but they were

12.Seller delays the projected move-out date.                              1 day or more *

13. Seller can’t find suitable replacement property!                3 weeks or more*

We have yet to talk about the appraisal, title or escrow process with possible and impossible delays. Part II of this column will deal with these delays and more and how to work with them for a successful close of your real estate transaction.