What To Do When The Seller Wants To Extend The Closing Date?

Why Would the Seller Cause Closing Delays?

The buyer or some other circumstance often delays the closing, such as an issue with the loan approval or title search, an appraisal lower than what was purchased, or problems found during the final walk-through. There are several reasons why the seller might delay closing the house, from simple work schedule issues to more serious issues such as the seller getting cold feet or refusing to honor the sale price. In the end, the buyer’s recourse depends on what the actual cause of the closing delay is, so finding out that reason is the first step.

When Buyers Want to Extend Closing Dates

Your home’s closing date is approaching, and you’re eager to finish the sale. You hear your agent say, “A buyer wants to extend the closing date.” There’s no reason to be worried about karma finally catching up with you. Usually, a buyer will ask for a few extra days at the end of a home sale… as frustrating as that can be. Although you may be anxious to close the sale, the buyer’s request for additional time before closing isn’t always a sign of doom. Fortunately, you have a few options you can take when a buyer asks for a closing date extension. These options can work in your favor and help you and the buyer achieve a win-win situation. You can weigh all your options when you work with a good real estate agent. But here’s how to get started.

Common Reasons for Extending Closing

Typically, a buyer will need more time for closing due to an honest issue with their lender. The most common reason buyers need more time is to approve their loans. Verification processes often cause delays in loan approval; underwriters can stay caught up while home inspectors reveal major issues that result in a stalled loan approval.

Common Reasons for Extending Closing

A delay can also occur if the buyer’s house doesn’t sell on time. They need the sale to go through before they can sell yours. Which action will give you the best results, depending on your preference?

Grant an Extension

It may be relatively simple for you to extend the closing date, without any strings attached, by your real estate agent, who can negotiate a new date. Extending the closing date can be beneficial to you. By extending the closing date, you will avoid having to re-list your property, find a new buyer, and go through the entire selling process again.

Negotiate a Per Diem Penalty

Alternatively, the buyer can receive an extension with a per diem penalty as a contingency. In addition to compensating the seller for the extra mortgage, tax, and insurance payments the seller still has to make due to the delayed closing, a per diem penalty is charged to the buyer as compensation for the inconvenience of delaying the delayed closing. If the sale had closed on time, you would have earned interest on the sale except for the per diem penalty, which is approximately one-thirtieth of your monthly housing expenses.

Add a Time of the Essence Clause

A buyer can extend the closing date as often as they like, and your patience may run out if your buyer persists in asking for an extension after the extension. In this case, you can offer the buyer one last chance to get their affairs in order and grant an extension with a time-of-essence clause if you still wish to proceed with the sale. Time of the essence may seem like theatrics, but it creates a hard deadline for the buyer. A time-of-the-essence clause allows the seller to leave the sale if the buyer does not meet a hard deadline.

Back Out of the Sale

You should follow through with the sale and close it. However, dealing with an unorganized and shady buyer is sometimes not worth your time and energy. Your contract may need you to grant at least one extension before you can back out of the sale. You can end the deal if your buyer fails to meet their contingency deadlines by closing and then put your home back on the market in a bid to find a buyer who will offer you a better price. In addition, you may also be eligible for the buyer’s earnest money deposit since the buyer failed to close on time under your contract.