This is a story as old as real estate sales. Everyone signs a contract for a charming Glendale home that says escrow shall close on an exact date. Buyers give notice on their apartments; sellers hire movers. 10 days before the scheduled close, the brokers call their clients with the news, “I am sorry, but we aren’t going to close on time”
If you aren’t prepared upfront, this will seem like devastating news.
But, here’s the truth. 1. the close date is a target, not a date set in stone and 2. closing a few days on either side of that target is the norm, not the exception.
Why is this the case? A real estate transaction involves a huge number of players. Besides the buyer, seller and their brokers, there are title, escrow and appraisal people. the lender has the processor, investor, document processor, the funder and more. Each of these people are working on a ton of files and, frankly, many couldn’t care less about your “set in stone” plans for moving. “I’m just doing my job, ma’am”.
So, what’s a body to do? How do you plan your life for the next 30-45 days? Here are some of my suggestions.
- Start at the beginning. Is the proposed close day fall on a good day of the week? Best days are Wednesdays and Thursdays. Are you able to move near that date? Take out your calendar and consider all your commitments
- Buyers should not give notice on their apartments until the physical inspection is settled and, ideally, not until the loan is approved. The 2 week overlap is a huge safety blanket for you.
- Sellers should use the same guidelines in hiring the movers.
- Sellers, do not count on closing escrow on time to save you on mortgage payments. If the escrow runs over a few days it is the cost of doing business. Counting those pennies as pennies lost will only bring you stress.
- If the potential for extra days of mortgage are truly a hardship, you can try to negotiate, upfront, a per diem penalty that the buyer owes you if the escrow runs over. However, a buyer will only agree to this unusual condition if they feel that are getting a really low price on your home. Asking the buyer for this penalty at the end of an escrow will generally get you nowhere.
These suggestions only apply to the normal delays in a close of escrow. Sometimes you have good reason to believe there is hanky panky going on and that is a post for another day.
To be forewarned is to be forearmed. Make sure you have a good understanding of where your transaction is, relative to the target, at all times and you will experience a more peaceful escrow.