I sold my home in early June. The deal is supposed to close in three days. The buyer just asked for an extension, what should I do? – ALARMED
DEAR ALARMED: Your situation is not uncommon in today’s market — we’ve received many versions of this question from both buyers and sellers in the last few months!
When a buyer requests an extension, it’s usually for a good reason. Perhaps their appraisal came in lower than it would have a few months ago, and it’s jeopardizing the financing that they thought would be a slam dunk. They may not have sold their current home yet, even though they didn’t make this a condition of buying yours.
No matter what is going on behind the scenes, my advice is the same: talk to your Realtor. Your agent can connect with the buyer’s agent and assess the situation. The hiccup may be as simple as a delay in the buyer’s ability to access their down payment, or a paperwork backlog at their financial institution (we usually hear about these types of problems earlier in the process, but you never know). By connecting both agents, you can figure out whether this is a small problem or a bigger one.
Because you are three days from closing, your lawyer should be aware of and involved in the situation. Call your insurance company as well, since you’ll need to insure your home until it is sold and can’t rely on the buyer to do so. If the utilities have already been switched over, you can ask the buyer to cover these costs. Your lawyer will make adjustments to the expenses and property taxes at closing. When a delay is caused by the buyer, the buyer typically bears the cost.
Depending on where you’re going from here, you may need to bridge finance (if you haven’t done so already) or extend bridge financing for your next home. Review your financing terms and any move-related details tied to a specific date, so you can figure out what to do and who to call next.
Now let’s look at what happens if you choose not to grant the buyer an extension: in simple terms, if the buyer is unable to close, you’ll be picking up the potentially messy pieces of a soon-to-be-breached agreement. It’s always better to solve the problem cooperatively than to dig in your heels, so seek advice from your sphere of professionals, including your realtor, lawyer and mortgage specialist.
PRO TIP: Complications happen, which is why I always recommend bridge financing and staggering the closing dates of your purchase and sale. While it’s tempting to deny the buyer’s request for a last-minute extension, it’s not a productive way to flex your muscles. If postponing your close by a few days (or weeks) keeps the deal together, it’s a much simpler and less expensive solution than starting over to find a new buyer. #Advice #AskDavid #TheNegotiator
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