Waiting to close on a home can be made all the more stressful if your buyer keeps asking for a closing date extension. You’re already in escrow (which might feel like forever in itself), and now the buyer wants more time before signing on the dotted line. It’s enough to send seller frustration levels through the roof. So if your buyer keeps asking for extension after extension, should you grit your teeth and be patient or consider calling off the deal?
If the goal is to close on a house, why would the buyer want to delay the process? There could be many reasons, but the most likely scenario is that the buyer is having trouble getting the mortgage approved.
The reality: Even someone with a rock-solid pre-approval can face unexpected hurdles getting a loan.
“A pre-approval is not full loan approval,” says Tracy King, a Realtor® in Pasadena, CA. “It’s the beginning of a long road of verifications that the lender requires from the buyer. All kinds of situations arise between the beginning of loan approval and the end, and even if the lender is doing a good job, the issues that can delay the process are mind-boggling.”
Changes in the buyer’s financial portfolio
Sometimes underwriters get swamped and can’t process mortgages as quickly as would be ideal. If that happens, a lender’s rules and regulations can change as buyers are applying for a loan.
If buyers, not realizing they should avoid taking on any new debt while waiting for the loan approval, make a big purchase—things could slow way down. Also, unexpected items (including previously unnoticed identity theft) can sometimes pop up on a credit report.
The buyer’s house hasn’t sold
Another reason buyers might want to delay closing is that they are having trouble closing on the house they’re currently living in. If their buyer needs an extension, that could make them unable to purchase a home without the money from the sale for a down payment.
Hopefully anyone in the buy-sell situation has already communicated that to you—and added a contingency clause in the contract that the buyer’s home must sell first.
Should you move on to another buyer?
In the end, it’s up to you to decide how long you’re willing to wait—and for what reasons. If you’re legally able to break the contract and you’re tired of dealing with your poky buyer, then talk to your Realtor about the possibility of finding a new buyer.
Whatever you do, don’t be too hasty, advises King: “You can demand to close escrow and cancel the deal, but is that really what you want to do if you have no other prospects? I’ve had deals drag on for weeks because of a loan processor making new requests for verifications based on the last piece of information received. It’s frustrating, but it can work out in the end.”
If you’re feeling worried, you have options beyond just breaking the contract.
“You could also ask the buyer for money for the cost of the delay for things like mortgage interest and taxes,” says Ginny Ollis, a real estate agent in San Diego.
The most important thing your real estate agent can do is find out from the buyer’s agent what’s really going on. There’s no point in waiting around if the buyer has no hope of getting approved for the loan. A buyer acting in good faith is probably just as frustrated as you are by the delay. Honest communication on all sides—perhaps backed up with a little extra earnest money—should help get the deal done as quickly as possible.