Long Escrows Can Be Costly
I have recently noticed a couple of homes in my subdivision that are back on the market after long escrows.
One of them sold around the middle of 2006 and I kept noticing it listed as “pending” with a planned closing date of 12/31/06 in MLS. I was curious about the long escrow because a typical escrow time in our market is around 30 days or so, but sometimes there are valid reasons.
That said, I get wary when I hear a buyer say they are awaiting an insurance settlement, receipt of inherited funds, funds from a note paying off, etc.
The aforementioned home is now back on the market with a tenant in the property. I know who the owner is and know they purchased a larger, more expensive home. It is apparent that things didn’t go as planned for them.
Without knowing the details, I can only assume they thought they had a solid deal and believed whatever then-plausible reasons they were given when the buyer requested a long escrow. They probably would have been better off to wait for a real buyer who was able and willing to close promptly.
Perhaps they received significant non-refundable earnest money and everything worked out for them. If not, this is surely turning into a costly experience for them if they are carrying two mortgages.
A similar scenario has occurred with another home near mine, but with somewhat different circumstances.
That home was originally listed by the sellers early last Fall when they were transferred out-of-state. The home sold (initially reported as a contingent sale), was pending for 2-3 months, and is now back on the market.
According to the new listing (re-listed to restart the days on market clock), the seller is now their relocation company. The relo company has the property listed at a retail-plus price and will have to get extremely lucky to get what they are asking.
Again, I am not privy to the details of either transaction, but I think it’s quite possible that the respective buyers noticed prices dropping while they were in escrow and decided they had paid too much before their closing date arrived.
Advice to sellers: Make sure your buyers are qualified, remove deal-killing contingencies early in your transaction, then get to closing as soon as you can.
January 16th, 2007 Posted in Buyer Stuff, Seller Stuff
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