 Posted 4/25/2007 1:12:32 PM
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| what happens if the closing date goes by and the loan from the buyer is still not ok'd. how long does the seller have until they can cancel the whole deal, and what costs does the seller have to pay to the escrow company if the deal is canceled? Does the seller keep the ernest money or is it to be returned to the buyer. My deal is already 10 days past closing date. any info would be greatly appreciated. thank you
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Posted 4/26/2007 10:19:49 AM
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Hi Millie:
Buyer's failure to get financing is probably the single biggest reason deals fall through. That's why getting a strong pre-approval letter from the buyer's lender, before you sign a sales agreement, is such a good idea.
10 days past closing is a fairly long time. What you can do, depends on how the sales agreement was written and what problems the buyers are having. Most sales agreements contain a "time is the essence" clause which specifies how long the buyer has to close escrow before the deal collapses. Most agreements also usually contain a financing contingency that says that unless the buyer can get a specified loan, there is no deal. (If the buyer hasn't removed that contingency and truly can't get financing, then I doubt you'll be able to keep the deposit.) Who is responsible for escrow charges if the deal falls through, probably was specified in whatever escrow instructions you signed.
If it were me, I'd have a "heart to heart" with the buyers. It may be that their financing fell through due to a bad lender and they may be scrambling to get new financing. If that's the case, and if they can get a strong commitment letter from a new lender, you may want to give them more time to try to save the deal. If, on the other hand, they simply can't qualify for a needed loan, you may want to pull the plug and start over.
Good luck!
Bob Irwin
Author, "For Sale by Owner Kit"
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Posted 5/5/2007 8:38:20 PM
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| thanks for the reply. turned out that 2 weeks after closing date the lender denied the loan because the applicant could not verify his income. His mortgage broker called me and told me this. I have not heard a word from the escrow company as of yet. I had the house off the market for 7 weeks while I was trying to work with the buyer. Now I have to start over again.
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Posted 5/7/2007 3:48:47 PM
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HI Millie,
You situation demonstrates two things home sellers should always do:
1) Only deal with buyers who have a WRITTEN pre-approval for a loan. That means the bank or mortgage broker has already verified the buyer's income and potential to carry the loan.
2) Always write into your contract that you will continue to market your home and accept back-up offers until the loan closes.
Luckily for you, this is the best part of the home selling season.
Best of luck for a quick sale that goes through.
FSBO Guru
Owners.com
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