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Close of Escrow dates: Resetting Your Expectations
With respect to real estate transactions, there is a tendency to think of the contract Close of Escrow date is being carved in stone. Whatever you may think about what should happen, allowing yourself or your client to think that way in this market would be foolish and supremely unrealistic.
I’ve commented on this before in an article entitled 6 Reasons Your Next Loan May Take Longer Than it Should and even a couple of mortgage lenders took issue with my statements (read those comments here). That sort of hubris these days comes just before we tumble down the steps, clutching our pride.
Here is further validation of that point from Realty Times.
Daily Real Estate News / October 11, 2007
Mortgage Woes: Be Patient With Closing Dates
Lenders are taking more time to get mortgage documents in order these days, and real estate professionals consequently must be prepared for a slower settlement process than they are accustomed to…
Real estate expert M. Anthony Carr urges them to choose a settlement date at least six weeks to eight weeks after the contract date and simply ask all parties involved if an earlier settlement is possible once the home inspection is completed, the mortgage documents are approved, and all other necessary tasks have been appropriately handled.
Closing costs likely will climb in the event of an earlier settlement, and buyers also must cough up extra money if the settlement is delayed and they have to stay in a hotel and keep their belongings in the moving van a little longer. Agents should advise sellers not to cancel their utilities in case the process is delayed, as the costs of canceling a few days later are minimal. Carr encourages agents to be up front about possible delays and urge their clients to assess the costs involved beforehand.
Source: Realty Times, Anthony M. Carr (10/09/07)
October 12th, 2007 at 11:25 am
2-COE No-No’s: Many agents have learned the secret to help create a smooth closing by following the 2-COE-No-No factors, which relies on identifying a specific calendar date in the contract or an extension. 1) No Friday or day before Holiday closings. Choosing a Tuesday or Wednesday allows for a 1-2 day extension and still avoiding a Friday closing. Also works well with possession considerations. 2) No closings the last 5-days of a month, which are the busiest for Escrow and Lender. Why swim upstream at the critical COE point. Therefore, instead of writing “xx-days after acceptance”, identify a specific date 4 to 6 weeks out, which will avoid the 2-COE No-No’s.
October 12th, 2007 at 11:41 am
Rick, I’ve always liked your advice to close on a specific date and to avoid Fridays. But an extra measure of flexibility is warranted these days. Setting expectations to accommodate the realities of this market is key to having happy clients in the end.
No different that the pilot letting everyone know they’re about to encounter some turbulence. We all appreciate knowing what’s coming, don’t we?