Does a closing date on a contract mean anything? Do you take it seriously? What does it mean to all of the parties involved? What does it mean to the buyer, the seller, the lender or even escrow? When I write a contract I have usually been in contact with lenders and escrow personnel asking what their work load is at the present time.
From the very beginning of my career deadlines have been very important to me. I have always made sure my clients know what "time is of the essense" meant and that it wasn't just a "saying". I would educate them on what our "computation of time" pargargph in our purchase and sale agreement meant and wanted them to take it as serious as I did.
I see this as one of the most important function of a licensed real estate agent. There are deals that have been lost because agents didn't abide by the contractual dates stated on acceptance.
What has always bothered me with this part of the home buying process is there are those involved that don't take the contract dates seriously.
In 2003 I went to work for First American Title/Escrow in Yucca Valley, California. Having come from a real estate agent background I knew a lot about the contract. When I started to question why we were not trying to meet the deadline for closing per the contract I was told that date was "an estimate" - I thought to myself - "AN ESTIMATE!" That isn't an escrow call or a lender call! I soon found out that we would just advise an agent to process an addendum to extend the contract.
Sure, it wasn't totally an escrow issue. Escrow being the final destination in most transactions is rarely given the time to complete their tasks. The issue would arise based on lender requirements (in a non-cash transaction). If the lender couldn't get their documents to escrow on time, escrow couldn't preform within contract. So many times the lender has a total different idea on what date they need to meet. Many times lenders have told my buyers what their definition of closing is and usually it is not what the legal meaning of the word really is for the State of Washington. Of course that is a topic for a whole other blog post.
Lately, I have seen the parties to a transaction act so flipant when it comes to the contract closing date. In
my last 5 transactions with 3 different lenders it has been the lender that just couldn't preform. All of these lenders have pre-approved the buyer prior to a contract being written. All of these lenders had met the buyers in person.
On a couple of occasions the lender has laid blame on the buyer. The buyer didn't get all their paperwork to them in time, the buyer did not sign this or sign that, the buyer didn't send in bank statements, or their W2's. These kind of excuses just tick me off! If you are a lender and you have not received these items in the first 5 days after meeting with my client - CALL ME - I will help you! I have been known to get the documents from a buyer and drive them to a lender. Don't blame my buyers. Some of them are new to the process and really don't understand unless we help them!
Now, don't get me wrong there are lots of people in the business that do play by the rules. I just don't understand why everyone doesn't.
I see the extension of most contracts as an excuse - excuse that someone didn't do their job. The only time an extension should be acceptable is when something happens that is out of everyones control at the time a contract is written. We may not know there are several title issues until we are several days in.
I just get irritated when I have to write an addendum to extend a closing date when I have done my job, my clients have done theirs, the other buyer/seller has done theirs as well as their agent. I am tired of others not preforming knowing that if the seller wants to sell and the buyer wants to buy they will all sign an extension (or will they). Why take the chance?
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buyers, sellers and agents take it very serious but can't say the same thing for the lenders. They really don't care and will move at their own pace.
German, you are so right. I guess this was a real vent on how some (not all) just work on their own agenda. I am of course referring to some biggies - Wellsfago, USAA, Navy Federal, ect. When I use my preferred lenders I have no problem, but buyers choose.
Gernan, you hit the nail on the head, I had a call today from a young couple overwhelmed with anxiety on their closing coming up. It doesn't look like it will happen that fast, and it doesn't matter what we tell the lender. Their best line is to "Check with us on Next Wednesday." My best line is "The bank is working on it."
Oh - you and I see eye to eye on this! I fairly recently had a transaction where the lender was not going to be able to perform and when I mentioned my concern about being able to get an extension signed, she actually said "Oh don't worry about it - what are they going to do, put the house back on the market?" I was so shocked at such a cavalier attitude. And actually the concern of my buyer, the listing agent & myself was that the seller was in such precarious health that we were afraid another delay might in fact kill the woman (thanks goodness we finally did get it closed, but that is not a lender I will ever recommend).
Nancy, I did have a client die during a transaction. Then it really bacame a mess.
Setting a proper closing date upfront is critical. Its very important to make sure that an agreeable date is set in the beginning. I just got a contract this morning from someone wanting a 21 day close and by the way, its a mail away to the seller. It would have been nice for me to have been involved in setting that date seeing as how meeting falls squarely on me now.
Getting buyers to understand the urgency of getting EVERYTHING requested in a timely manner is one of our biggest challenges. All loan disclosures must be signed/dated. That is a compliance issue if they are not. For bank statements, we need every page that has a number. Any non-payroll direct deposit of $300+ may have to be documented. Those are just a few of the challenges that I regularly encounter.
Some loan programs just take longer to close than others. Knowing the financing type will help better manage time as well.
Rodney, some very good points. My last transaction was with USAA - they require a 45 day close - no if, ands, or buts. I called to ask for a date I should use and still had to write 2 extensions. 50 days is plain silly if you are telling me you have everything (as they did).
Grrrrr...I did a deal recently with Wells Fargo that was a complete nightmare waiting on condo approval. Every time they said they had all of the info they needed - well, they lied. Over and over and over again we had to provide additional info, resend docs already provided and extended the closing date 3 times waiting on them to get their act together. Buyer, seller, agents - we all did what we needed to do. Even the title company was getting frustrated with the lender!
Lisa, I had a Wellsfargo deal from hell in May - in fact two! I don't think that loan rep will ever hear from me again! I think he knows it too! It sure has been hard lately getting things closed!
For a conventional loan, around 30-35 days should be sufficient. For FHA/VA, try to allow 40-45 days. Always keep in mid that REO sellers typically require the HUD to the attorney's office 72 hours in advance. That means that we actually lose 3 days right there. It's always easier to ask for too much time and closeearly, rather than not asking for enough then needing an extension.
To Lisa's comment. I don't know about your particular experience, but please keep in mind that as a lender, we are reviewing an ENTIRE condo project. There are a number of legal aspects that we must make sure are met. One document presented may then bring up an additional questionthat then must be addressed. If our condo reviewers are not careful, we have a potentially unsaleable loan. No lender wants that. Getting the proper documentation from the HOA can often be our biggest challenge. If the project is not FHA approved and you are doing an FHA loan, make sure to allow extra time for that approval.
Sometimes everyone has done their job and still a delay happens. It's frustrating but still...as long as the deal closes I don't care. I'd rather write an extension than a cancelation! :)