Buyer Can’t Close?
You’re selling your home in Rocklin and everything seems to be going smoothly when suddenly the buyer wants an extension because they can’t close on time. What should you do?
First, it’s important to understand why the buyer is asking for more time to close the escrow. Sometimes extensions are worrisome. Is the buyer suddenly unqualified? Are they having trouble liquidating enough money for the down payment? These are some definite red flags.
Maybe the buyer found a much better rate and they need a few days to redraw the loan docs. This is more understandable because they want to save money during the life of their loan but are still qualified to move forward with the purchase.
Is there a good reason to grant an extension?
If you feel like there is a valid reason for the buyer to ask for an extension, it should definitely be considered BUT your Rocklin real estate agent should negotiate the terms of the extension and put some important boundaries in place.
Here are some extension terms I often negotiate when my Rocklin real estate sellers are asked for an extension:
- I recommend extending the buyer for a couple days at no charge. This is a gesture of good will.
- After 3 days, I negotiate a late fee for every day the buyer doesn’t close. Example: A late fee of $100 p/day will be charged on days 3-6.
- After 7 days, I will negotiate an even bigger late fee if the buyer doesn’t close. Example: A late fee of $200 p/day will be charged for days 7-14.
These late fees really get a buyer (and their lender) moving! They add up and all late fees are provided to the seller.
- After a certain date, no extension will be provided. There comes a point when you have to cut your losses and move on. If you’ve already given an extension of 1-2 weeks and are still getting the runaround, it’s probably time to send a 24 Hour Notice to Perform and cancel the escrow if the buyer can not.
- Occasionally, I will ask that the full deposit be released immediately to the seller in order to grant an extension. I do when this when there are a lot of red flags. That way if the buyer can’t perform, at least the seller already has their security deposit. It will help make up for all the time wasted and hold the seller over so that we can find a new and better qualified buyer.
Is your real estate agent giving you value?
During my 600+ escrows, there have been plenty of times when an extension to close is valid and reasonable. But there have been times when something just doesn’t smell right. Part of the value of hiring a great Rocklin real estate agent is to fish out the reasons why an extension is needed and negotiate the extension terms so you are compensated and protected. Small extensions are needed about 15% of the time but should be carefully crafted.
Read more Rocklin Real Estate Tips: How Long Does it Take to Sell a Rocklin Home?