Delayed Closing ~ Who Pays?

 

Moving

I am sure that many of you have encountered the dreaded delayed closing!  It has become more of a norm these days and I am finding that the issues that are causing this are many times from someone dropping the ball in some way!  So when this occurs, who pays?

 

The buyer can be out financially as they may be in a temporary living situation.  Finding out that their closing may be delayed can cause them to have to make arrangements to extend a lease, pay additional days of rent or have to incur another interim move.

 

The seller may be in the same situation as the buyer with their new home.  The old domino effect is now in play.  Everyone along the chain is affected.

 

I have a first-time home buyer in this situation currently with a newly constructed home.  He was originally supposed to move in mid-October and the date is now set for December 30th!  Fortunately, his apartment company has agreed to extend his lease again and again but the rate has increased for him with each extension.

 

Going to bat for this young man, the new home company has agreed to increase the amount they were putting in towards his closing costs.  Additionally they have agreed to pay for the extra expense of paying additional costs of having the inspector have to come out again.  This doesn't always happen.

 

When the Lender/Underwriter delays however, I have yet to see anyone being compensated for their out of pocket expenses due to their delay.  Many times, the deal is just dead after delays such as this.

 

So who pays for the delay?  Sadly what I have seen is that the consumer is the one who ultimately loses out when there are closing delays.  It is an unfortunate event!

 

Having a real estate agent represent you is so important.  Being able to intervene on your clients behalf when a delay happens can help a lot.  We may not be able to prevent the delay but you can bet that we are going to do our dead level best to get to a solution to assist the client.

 

Make sure that you are fully represented in all real estate transaction by a licensed real estate agent!  We are your advocates and will be with you throughout the process.  Delays do happen so being prepared just in case is not a bad thing!

 

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   Paula L. McDonald ~ REALTOR®

       Managing Broker ~ Granbury, Texas 

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PaulaMcDonald@MagnoliaRealty.com 

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Copyright 2017 Paula McDonald

Comment balloon 24 commentsPaula McDonald • December 16 2014 12:59PM

Comments

Hey Paula, I agree I have seen more of this lately than ever. Its always something. Many times its not even the borrowers fault its something to do with an item caught in underwriting the borrower was not aware of or did not think was a big deal. Sometimes I have seen borrower causing the issue though not disclosing items properly. Add to that the feds have literally  RUINED this industry. First with the Stated products they ALLOWED and then acted surprised that the loans did not service, then the insanity regulations we deal with today for good borrowers to go through to close on a loan is absolutely a crime!

Posted by David Shamansky, Creative, Aggressive & 560 FICO - OK, Colorado Mtg (US Mortgages - David Shamansky) almost 4 years ago

     I had a Buyer paying extra $$$ for the Ryder Truck, plus the cost of the Motel for several nights.  The Seller could not get the money they needed, etc.  The Lender said that her hands were tied.

     Who gets the blame?  I have to lay it upon the Federal Government of Washington DC and their Draconian rules and regulations,.

Posted by Fred Griffin, Licensed Florida Real Estate Broker (Fred Griffin Real Estate) almost 4 years ago

Paula McDonald - The last few delayed closings I had to deal with were because of the lender and they stepped up and compensated the affected parties.

Posted by Nicole Doty - Gilbert Real Estate Expert, Broker/Owner of Zion Realty ZionRealtyAZ.com (Zion Realty) almost 4 years ago

I had a delayed closing recently, only one day, but the pro rata taxes/condo fees were borne by my sellers, who had nothing to do with the delay.  The title company stepped up, despite the delay being on the part of the buyer's lender, and gave the seller a credit for the amount.  This was a relatively small sum, but I was impressed the title company didn't think it was exactly fair.  

Posted by Susan Haughton, Susan & Mindy Team...Honesty. Integrity. Results. (Long and Foster REALTORS (703) 470-4545) almost 4 years ago

David Shamansky I have to agree with you that the feds have seriously messed up our closings!

Posted by Paula McDonald, Magnolia Realty ~ Granbury, TX 936-203-0279 (Magnolia Realty ~ Granbury) almost 4 years ago

Fred Griffin yep the gov. has caused our already difficult system to be even further messed up!

Posted by Paula McDonald, Magnolia Realty ~ Granbury, TX 936-203-0279 (Magnolia Realty ~ Granbury) almost 4 years ago

Nicole Doty - Gilbert Real Estate Expert that is great that the Lender's stepped up! That is the right thing to do if they were the ones causing the delay.

Posted by Paula McDonald, Magnolia Realty ~ Granbury, TX 936-203-0279 (Magnolia Realty ~ Granbury) almost 4 years ago

Susan Haughton very good that the Title Company did step up.  Such a tough situation for all when this happens.

Posted by Paula McDonald, Magnolia Realty ~ Granbury, TX 936-203-0279 (Magnolia Realty ~ Granbury) almost 4 years ago

I think with all of the new regulations in place now and more coming down the pike we are going to have to start setting expectations for buyers and sellers to account for more delays than ever before.  Not sure how we are going to address this going forward.

Posted by Jenna Dixon, Empowers You With a Better Real Estate Experience (DRA Homes | Cobb County Real Estate ) almost 4 years ago

Oh yes, I see this all the time, too and it is unfortunate when it costs either party money.  I currently have a customer renting for longer (and it costs them extra money) and they've had to reschedule movers and pay for more storage time.  I've also seen jobs on my end canceled as people sometimes just run out of time. It can be a domino effect.  It's so important to have an experienced realtor on your sides as sometimes they can reduce the delays (just from good follow up) and second, sometimes help negotiate compensation.

Posted by Debbie Gartner, The Flooring Girl & Blog Stylist -Dynamo Marketers (The Flooring Girl) almost 4 years ago

Delays are more commonplace with additional checks in place, but I put a lot of it not only on regulators, but also on consumers - those people that got a mortgage knowing they were about to go delinquent on all of their accounts, or the ones who didn't tell anyone they lost their job a few days before settlement?  They're the reason for last minute verifications of employment, or last minute checks for credit inquiries, and a lot of the last minute, 11th hour requests for documents that lead to delays.  I feel really bad for qualfied borrowers that are good people just trying to buy a house - but there are still a lot of scam artists and people out there trying to commit fraud - it's largely on them that the process is so difficult for everyone these days.

Posted by John Meussner, #MortgageMadeEasy Walnut Creek, CA 484-680-4852 (Mason-McDuffie Mortgage, Conventional Loans, Jumbo Loans, FHA, 203(k), USDA, VA,) almost 4 years ago

Paula - Very true, delayed closing can cause financial issues and inconvenience.

Posted by John Pusa, Your All Time Realtor With Exceptional Service (Berkshire Hathaway Home Services Crest) almost 4 years ago

Paula,  a nice read with some great pointed highlights to help in our businesses.

Posted by Winston Heverly, GRI, ABR, SFR, CDPE, CIAS, PA (Winston Realty, Inc.) almost 4 years ago

Paula McDonald ~ it is very refreshing to hear lenders are TCB, because delays are bad for all parties involved

Posted by Jon Kolsky, Licensed California Real Estate Broker (Kolsky Realty & Management) almost 4 years ago

I had ran into this several times over the last few months. In my cases it was the agent who was at fault.  I cured that issue however last Monday.  Hope the agent does well at the new agency.....

Posted by James Dray, Exceptional Agents, Outstanding Results (Fathom Realty AR LLC) almost 4 years ago

Paula, I like reading that this builder has in fact taken some responsibility for the delay.  As you write, it can be really frustrating when we get these delays from lenders.  They seem to be the only party that is not held accountable in real estate transactions.

Posted by Gabe Sanders, Stuart Florida Real Estate (Real Estate of Florida specializing in Martin County Residential Homes, Condos and Land Sales) almost 4 years ago

Hi Paula McDonald - nice post and delayed closings do create a domino effect. And sometimes the seller can charge a per diem rate for each day it doesn't close (if buyer is late).

Posted by Sharon Paxson, Newport Beach Real Estate (Compass) almost 4 years ago

Paula, Good advice as all buyers and sellers need a Good Realtor to reprsent them. many times new home buyers think they are getting a better deal without a Realtor. Thanks for the well written post. 

Posted by Robert Bob Gilbert, Your Katy TX ( West of Houston) Real Estate Expert (Berkshire Hathaway HomeServices Anderson Properties) almost 4 years ago

Paula,  My answer is everyone pays.  It causes bad ju-ju all the way around. It takes time and effort for those, like you, who go to bat for their clients.  I agree that delays happen one some one dropped the ball.

Posted by Kathleen Daniels, San Jose Homes for Sale-Probate & Trust Specialist (KD Realty - 408.972.1822) almost 4 years ago

FEATURED IN CRAP-TACULAR

What the?

Posted by Kathleen Daniels, San Jose Homes for Sale-Probate & Trust Specialist (KD Realty - 408.972.1822) almost 4 years ago

I have never seen a lawyer penalized for delay of closing - perhaps because no one knows it was their issues ........    I just had such a deal

Posted by Dagny Eason, Fairfield County CT, CDPE Homes For Sale and Condo (Dagny's Real Estate) almost 4 years ago

These inconvenient and costly delays are more common than may home buyers and home sellers may realize. All need to be advised to have back up plans in the event of a delay. If possible this should be addressed in the contract.

Posted by Roy Kelley, Roy and Dolores Kelley Photographs (Realty Group Referrals) almost 4 years ago

I think when there is a delay most parties lose. The seller has made preparations to move and is depending on his money. The buyer needs a home. Rarely does the lender step up to make it right financially.

Posted by Debbie Reynolds, Your Dedicated Clarksville TN Real Estate Agent (Platinum Properties) almost 4 years ago

Paula, I think all too often those who didn't cause the problem end up taking it on the chin. When the lender is at fault they sure don't want to admit it or take financial responsibility. 

Posted by Nick T Pappas, Madison & Huntsville Alabama Real Estate Resource (Assoc. Broker/Broker ABR, CRS, SFR, e-Pro, @Homes Realty Group, @HomesBirmingham & Providence Property Mgmnt, LLC Huntsville AL) almost 4 years ago

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