Closing Escrow

Buying or selling a home can tend to be a pretty stressful experience. In fact, it can be a hair pulling,relationship threatening, ulcer creating kind of stressful experience. It often seems to me that the hairiest part of a transaction occurs around the close of escrow. My goal in every transaction is to make the escrow as smooth, for everybody, as it can possibly be. The reason for that is that I’ve experienced many “escrows from Hell” and I would just as soon avoid any future ones, if at all possible. Having said that, 2008 seems to me to be the year of delayed closings.

I’ve never been quite sure why, but escrow’s seem to go pretty smoothly at first. You ratify on the offer, the buyer places their deposit into an escrow account with a Title company and off you go. Sometimes stress occurs surrounding inspections but alot of the escrow stress this year exists in regard to the lender’s criteria and the buyer’s ability to get a loan. Often, a lender will produce a pre-approval letter for a buyer in writing that ultimately doesn’t have much meaning because their criteria has gotten tighter during the escrow period. Lenders have come back wanting more documentation, more down payment and more up front costs for putting the loan together. The stress increases as both buyer and seller come close to the originally agreed upon close of escrow date and, typically, they have made their moving plans, have trucks ordered and quite often sellers have another escrow either closing simultaneously or very close to their own sale. Usually, it’s not a really big problem when an escrow closes a few days late…it’s when the process drags out for weeks that it becomes particularly painful. Why does it drag on, you ask? Because we live in an imperfect world where doo doo happens…and it’s often hard to predict the things that seem to go sideways. Also because there has been so many inexperienced people in Real Estate that have been ill equiped to deal with that flying doo doo. Here’s some examples from my own experience:

The buyers on a listing I had, two men, went to sign their papers at the Title company and one said he wanted to take title as “a married man buying as a single man”. It was explained to him that he couldn’t do that under California community property laws and that he would need to get his wife to sign a quit claim off of title. She was living out of the country. The buyer needed to 1) inform her of his purchase and 2) get her to go to a US consulate office and sign the necessary document in the presense of a notary. That all took an additional 10 days. We closed.

A buyer on another listing I had used an online lender who required him to pay his loan fees to them up front, not through escrow, and they became uncommunicative as close of escrow drew near. As it turned out, they were actually in upstate New York. They were not returning phone calls as we hit the week of COE and, the buyer was forced to change lenders at the last minute so that we could close a week late. He lost $3000.00 in fees to the 1st lender.

Most delayed closings are directly related to the lender or the buyers lack of preparation in the process. It’s another great reason be prepared when you make an offer.

Comments

  1. Ouch, how stupid some people can be. Let’s face it, it’s not a normal thing for most, their being displaced, the new financial burden is setting in . . .

  2. Everything from the saddness of deaths, illness, and job losses to the humour of too many kids hanging off the walls….to trying to settle the same deal every way fthere is!

  3. I had a lady who sold her house in Chicago and got in the moving van and drove to Tucson. When she got to the closing, she had forgotten the down payment. She had to call her stock broker and sell off shares to close 5 days later. I got a call from her when she got to the closing: “Was I supposed to bring a down payment? How much did we decide on? 20% …to avoid mortgage insurance. Oh, that’s a lot! Can we change the down payment?”

  4. Chad Baird says:

    A buyer who was set to close on Friday, but the astrologer told him the stars were not positioned correctly and needed to wait until Tuesday.

    It left us all speechless but the fear in face told us all this was not happening. It finally closed when the stars were right.

    Then I had a guy who insisted on reading word for word every page of everything he signed. He was no speed reader nor could he read to himself. The closing was scheduled on a Friday at 4pm. It took us almost 4 hours to to close. After an hour into it, everyone sat there in stunned silence. Any conversation made him stop reading and join in the conversation.

  5. Jim Minkey says:

    Oh, my gosh! These last two are classics! I never cease to be amazed at the wonderful world of real estate!

  6. Interesting post. This is a crazy market and yes, many things are changing. Just remember, we are in a cycle. This is the market where the professional will survive.

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